Compare lancasters 'characteristics' approach to consumer demand with Essay

Compare lancasters 'characteristics' approach to consumer demand with the standard neo-classical approach. What is lancaster's c - Essay Example Take any microeconomics book and one would be able to see a lot about consumer demand and supply, pricing strategy, branding and supply chain management in detail. These theories and strategies are (Lee & Keen, 2002, p- 7) mostly framed on various concepts which evolved throughout the time for centuries. The neoclassical economic theories are the most famous among them. They are used extensively in economics till date. Neoclassical theory basically explains the output of employment. According to it, the value of the product is determined by the time spend to create it and the labor cost involved. Consumers buy the product for their pleasure(utility). Every consumer purchases a product to make their life easier or pleasurable in one way or another (Clark, n.d.). The theory emphasizes, the people who work more, earn more and hence purchase more. Every business uses neoclassical theories mentioned in these books for creating value for their products and marketing them to a certain exten t. Over the years, many strategies like the prospect theory started to evolve in the place of the neoclassical theory. Lancaster's model of consumer demand which explores the characteristics of the goods is widely applicable to the modern day businesses where no major physical entity is involved. He argues a person buys the characteristics of the product not the real product. He simply states â€Å"goods are what are thought of as goods†. According to the theory, a consumer actually pays for some characteristic of the product like the nutrient content in the milk which will be useful to them. This paper compares the Lancaster theory with the neoclassical concepts and analyzes how the former one is more suitable to the modern day businesses. Lancaster’s Concept The "New Economic Theory of Consumer Behavior" redefined the way the economists look at business. According to the theory, every product is considered as a set of characteristics that are useful to the customer ( Wierenga). This model is multidimensional and helps in maximizing the profits of modern day businesses like cloud computing and software as a service where only the characteristics of the product are utilized by the customers. The Lancaster model is not as famous as the other economic theories. Only a very few scholars have tried to prove its benefits with empirical data. Ratchford has proved the model is applicable when a customer is given a choice to choose one particular product from various alternatives. Lancaster model opposes the traditional demand theory model emphasized widely by the neoclassical theory. The main advantage of this approach is it gives us a chance to explore the technological attributes of the product in a much better way (Marcin, 1992). According to the neoclassical theory, only goods concerned with the basic needs like food, shelter and entertainment are considered as commodities of high demand. They deal with customer choice with budget constraint as the m ain factor influencing the customer behavior. The customer will choose a product that is useful to them in maximum ways and still stays affordable. The Lancaster model on the other hand insists, the goods themselves are not purchased, but only their characteristics, which are in turn shaped by observing the customer b

Funding application for homeless people Coursework

Funding application for homeless people - Coursework Example Not having a permanent roof over their heads, which is a fundamental right of all citizens, goes hand in hand with other problems associated with lack of proper food and clothing. This then causes detrimental effects on their health. And, they are further disadvantaged by not having access to any guidance or information to improve their condition. Compared to other youth who live in families in houses, they are at a disadvantage by not being able to educate themselves for immediate as well as long term benefits and future prospects. It is a deep rut of despair and a vicious cycle of no hope to be in such circumstances. One only needs to look at those who do have homes to live in to see how much of a disadvantage these homeless youth have, not being able to leave normal lives like the rest of us. The health problems that inevitably afflict homeless people cannot be understated. "Homeless people are more likely to suffer injuries and medical problems from their lifestyle on the street, which includes poor nutrition, substance abuse, exposure to the severe elements of weather, and a higher exposure to violence." (http://www.ipedia.net/information/homeless) The youth and children are particularly vulnerable groups of people in this regard. Our projects aims to cater to these disadvantaged people by providing them with what they desperately need; to feed and clothe them; to protect them from the weather, getting involved in wrong types of activities; to protect them from being taken advantage of by criminals, gangs, drug traffickers, organ snatchers, pedophiles, prostitutes etc. Instead we will provide them with decent sheltering facilities, and provision of food to stave off hunger. And, we will help resolve their personal problems through the provision of counseling and information services, then relocate them to a safe permanent abode