Concepts of Consumer Sovereignty

by Walter Johnson; Updated September 26, 2017
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Consumer sovereignty is a simple approach to marketing. It remains one of the oldest approaches to consumption and marketing, going back to the Scottish enlightenment of the 18th century. Ultimately, this idea is a part of rational choice or decision theory, one of the most popular approaches to choice in the social science literature.

History

Adam Smith has long been considered the founder of consumer sovereignty theory. The basic idea is that the free market is justified through competition. The specific form competition takes in the free market is competition to please consumers, who are assumed to want cheap goods of high quality. Once they find a source, they ill support the source, while those who cannot produce such goods will go out of business.

Features

Consumer sovereignty is based on two pillars: knowledge and free will. The sovereign consumer is assumed to know what she wants, to be able to distinguish good from bad quality, and have the means and desire to act on this knowledge. Another way to express this is that the consumer is considered not an object to be manipulated, but a rational animal that is discerning and critical about the products he buys. The sovereign consumer is the rational consumer.

Effects

The doctrine of consumer sovereignty forces producers to create the most efficient production process available. Given economic competition, consumers, considered rational beings, will naturally gravitate toward those good that mix quality with price, at an equilibrium desired by the consuming public.

Significance

The sovereign consumer acts much like the voter in a political democracy; in fact, the parallels with political democracy are striking. Goods of an inferior quality are driven from the market. Goods that are overpriced due to inefficient systems of production are equally dispensed with. The point is that consumers are like voters who vote with their dollars. The dollar will chase the best products at the best price, and drive all others to defeat, thus forcing the producers to develop the most efficient system of manufacturing possible to satisfy this demand.

Problems

Rational choice theory is highly simplistic, which is one of its strengths as well as one of its weaknesses. The problem with the approach is that it takes the individual consumer as abstracted from social life in general. Social life is saturated with fads, fashion, public opinion and categories of people that often force consumption. Upper-middle-class people believe that buying a Lexus or Mercedes is necessary to reflect their status. Many young people feel that getting a tattoo is a way to fit in, and the content of that tattoo is often dictated by the social niche the person fills. Clothing, especially for women, is driven by fashion and class status, not comfort or price. Social life creates as many opportunities for forced purchases as free ones. As a result, advertisers seek to capitalize on this and appeal to status messages rather than reason.

About the Author

Walter Johnson has more than 20 years experience as a professional writer. After serving in the United Stated Marine Corps for several years, he received his doctorate in history from the University of Nebraska. Focused on economic topics, Johnson reads Russian and has published in journals such as “The Salisbury Review,” "The Constantian" and “The Social Justice Review."

Photo Credits

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