Page 1 of 9

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 11

October 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 85

Changing Consumer pattern from Price to

Attribute; an Empirical study

Dr H K Renushree

Assistant Prof , PG & UG dept of Economics ,

Field Marshal K M Cariappa College Madikeri

ABSTRACT

One of the most fundamental building blocks of economics is the law of demand.

Demand theory describes and explains individual choice of consumption bundles. Traditional

theory considers optimizing behaviour when the consumer's choice is restricted to

consumption bundles that satisfy a budget constraint. The budget constraint is determined by

price–income pairs.

On the other hand Characteristics demand theory states that consumers derive utility

not from the actual contents of the basket but from the characteristics (attributes) of the goods

in it. This theory was developed by Kelvin Lancaster in 1966 in his working paper “A New

Approach to Consumer Theory”. Lancaster argued that individuals do not have preferences

for marketed goods or services as such; instead they have preferences for particular

characteristics. The individual gets utility not from the consumption of goods directly but

from the acquisition of these characteristics embodied in the goods. Labelling characteristics

by the letter Y, an individual's utility can be written as U = U (Y1, Y2, ..., YN) where the

various items inside brackets are N characteristics that 'matter' to this person's subjective

well-being.

The traditional theory of demand recognizes that the desire for a product fluctuates

with the price of the item. The simplified summary of the theory says other things remaining

constant higher the price, the lower the demand vice versa. But there are other important

considerations that influences more than price in recent times. Attributes of products like

shape colour aroma packing and durability etc can also have significant influences on the

level of demand for products.

With this background, this article analyses empirically changing consumer behaviour

from price to attributes based on primary data.

Key words: Traditional demand theory; Lancaster Theory; Consumer Behaviour; Attributes

Page 2 of 9

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 11

October 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 86

Changing Consumer pattern from Price

to Attribute; An Empirical study

Introduction

In the era of globalization, attribute

has gained recognition as a determinant in

consumer purchasing. Consumer

behaviour is stated as the behaviour that

consumer displays in searching for,

purchasing, using, evaluating, and

disposing of products, services and ideas

that they expect will satisfy their needs.

The study of consumer behaviour is

concerned not only with what consumers

buy, but also with why they buy it, when

and how they buy it, and how often they

buy it. It is concerned with learning the

specific meanings that products hold for

consumers.

One of the most fundamental

building blocks of economics is the law of

demand. Demand theory describes and

explains individual choice of consumption

bundles. Traditional theory considers

optimizing behaviour when the consumer's

choice is restricted to consumption bundles

that satisfy a budget constraint. The budget

constraint is determined by price–income

pairs.

On the other hand Characteristics

demand theory states that consumers

derive utility not from the actual contents

of the basket but from the characteristics

(attributes) of the goods in it. This theory

was developed by Kelvin Lancaster in

1966 in his working paper “A New

Approach to Consumer Theory”. Lancaster

argued that individuals do not have

preferences for marketed goods or services

as such; instead they have preferences for

particular characteristics. The individual

gets utility not from the consumption of

goods directly but from the acquisition of

these characteristics embodied in the

goods. Labelling characteristics by the

letter Y, an individual's utility can be

written as U = U (Y1, Y2, ..., YN) where

the various items inside brackets are N

characteristics that 'matter' to this person's

subjective well-being.

The traditional theory of demand

recognizes that the desire for a product

fluctuates with the price of the item. The

simplified summary of the theory says

other things remaining constant higher the

price, the lower the demand vice versa.

But there are other important

considerations that influences more than

price in recent times. Attributes of

products like shape, colour, aroma packing

and durability etc can also have significant

influences on the level of demand for

products.

With conventional theory, the

introduction of a new option meant that we

Page 3 of 9

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 11

October 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 87

could not reliably predict how this would

slot into the consumer’s preference map.

However, by relying on a study of the

characteristics rather than the goods or

service involved, we can predict how

changes will affect a consumer’s

behaviour without needing to start once

again empirically.

Consumer research takes place at

every phase of consumption process,

before the purchase, during the purchase

and after the purchase. According to Philip

Kotler consumer behaviour as “all

psychological, social and physical

behaviour of potential customers as they

become aware of and evaluate, purchase,

consume and tell others about products and

services”. The scope of consumer

behaviour includes not only the actual

buyer and his act of buying but also

various roles played by different

individuals and the influence they exert on

the final purchase decision .Individual

consumer behaviour is influenced by

economic, social, cultural, psychological,

and personal factors.

Methodology:

This research is descriptive and empirical

in nature. Data has been collected from

both Primary and secondary sources.

Primary data has been collected through

online survey method with closed ended as

well as open ended framed questionnaire.

Nearly 150 samples were collected but due

to certain incomplete samples only 104

samples were used for analysis. Non

probability snowball sampling technique

has been used to collect the sample. Data

has been collected during the month of

November to December 2016. This data

has been analyzed with statistical tools like

percentages frequency and multiple

regression method for analyzing factors

influencing consumer behaviour keeping

Lancaster theory as base.

Objective of the Study:

1. To know consumers preference

(price or attributes)

2. To identify factors influencing

Consumer preference

Review of Literature:

Following literature have been reviewed to

link shifting of consumer preference

pattern.

A. Abdul Brosekhan & C. Muthu

Velayutham in their article “Consumer

Buying Behaviour – A Literature Review”

have reviewed Consumer Behaviour based

on different approaches like the traditional,

positivist perspective based on utilitarian

approach to consumption that is based on

price. While the non-positivist