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An economic analysis of demand of the very poor

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  • Lee, Sanghak
  • Thomas, Suman Ann
  • Allenby, Greg M.

Abstract

Economic studies of consumer behavior focus almost exclusively on people in developed countries with relatively large household budgets as compared to others in the world. The very poor, those surviving on less than $2.50 per day, make up half the world's population and are not represented in academic studies of brand preference and choice. Those characterized as extremely poor, living on less than $1.25 per day, are estimated to comprise 1.3 billion people, with nearly half living in India and China11https://www.dosomething.org/us/facts/11-facts-about-global-poverty.. In this paper we investigate demand for the very poor using economic models of choice that have been applied to studies of the American consumer in two product categories, toothpaste and laundry detergent. The data come from a unique panel of respondents in India where consumers purchase small and affordable single-use packages. Our analysis indicates that standard models of demand used to study wealthier consumers also apply to people in extreme poverty.

Suggested Citation

  • Lee, Sanghak & Thomas, Suman Ann & Allenby, Greg M., 2020. "An economic analysis of demand of the very poor," International Journal of Research in Marketing, Elsevier, vol. 37(3), pages 544-556.
    • Handle: RePEc:eee:ijrema:v:37:y:2020:i:3:p:544-556
    DOI: 10.1016/j.ijresmar.2020.01.003
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    References listed on IDEAS

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    1. Greg M. Allenby & Peter E. Rossi, 1991. "Quality Perceptions and Asymmetric Switching Between Brands," Marketing Science, INFORMS, vol. 10(3), pages 185-204.
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    6. Sanghak Lee & Greg M. Allenby, 2014. "Modeling Indivisible Demand," Marketing Science, INFORMS, vol. 33(3), pages 364-381, May.
    7. Pauwels, Koen & Erguncu, Selin & Yildirim, Gokhan, 2013. "Winning hearts, minds and sales: How marketing communication enters the purchase process in emerging and mature markets," International Journal of Research in Marketing, Elsevier, vol. 30(1), pages 57-68.
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    Cited by:

    1. Kim, Youngju & Hardt, Nino & Kim, Jaehwan & Allenby, Greg M., 2022. "Conjunctive screening in models of multiple discreteness," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 1209-1234.

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