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  • Vinay Nair

Consumer Capital is important for startups at early stages

Consumer capital as a term was first introduced in the 1920’s and has been continuously refined since...

Consumer capital in simple terms refers to the notion of corporate entities manipulating the consumer to purchase (and continue purchasing) material goods, thus driving the capitalist economy. It is in actuality a theoretical economic and social political condition in which consumer demand is manipulated in a planned way through mass marketing strategies that ultimately benefit the seller.

The concept of consumer capital started during the boost of departmental stores in the US in the 1850’s. Human needs are often satisfied, but wants can never be. Hence, the idea was for consumers to keep buying their products in order to fulfil their wants. This resulted in consumer loyalty for the stores and also provided them with continuous revenue. Slowly the concept evolved and sellers used their knowledge to manipulate customers regarding products like cigarettes and soap.

Besides these examples of consumer capitalism, the best example in history was orchestrated by the American government during World War I. The state encouraged citizens to purchase food stuff not to satisfy their needs but to support their country in an effort to receive financial support for the ongoing war. It was a show of solidarity and nationalism for their country.

Another great example of consumer capitalism is from the works of Edward Bernays who is known to be the founder of the public relations industry. His first great success was organising one of the first consumer capitalist marketing campaigns selling cigarettes to women, on the psychological premise that women should declare their independence from their male counterparts by smoking.

Noteworthy trends for Startups, today

Today startups with limited access to capital believe that bootstrapping and fundraising are the only methods to effectively generate cash to carry out business activities. There is no doubt that to this statement, but fundraising is not a simple task and cannot be carried out continuously. Here comes in the use of the concept of consumer capital in terms of startups.

Startups need to innovate and develop products that create a desire amongst consumers to keep coming back for more. Startups can come up with supplementary goods and services to their core offerings to begin with. This strategy has been followed by many of the larger business conglomerates over the years as well and helps build capital through the process of creating consumer demand and building a better brand reputation as well. Acquiring capital through this process can also serve as a lucrative for further investments for startups as it provides a basis for growth and confidence in the company.

In today’s world companies some of the biggest companies in the world including Apple follow some form of consumer capitalism strategies. The introduction of the Air pods for example was more of a desire driven offering rather than need.

The sneaker and streetwear industry is another great example where desire drives the majority of the demand. The sneaker demand has seen such a huge uptrend that customers are willing to pay multiples of the original retail price to purchase the desired product.

Startups need to shift focus periodically from outsourcing funds to creating a desirable brand. This needs to be the new age thinking embedded in the startup ecosystem. Consumer capitalism has lost its importance over the years, but is still providing results wherever followed. On the upside, increased globalisation and interdependence between countries has increased the desire for material possessions even in developing countries thus driving global demand and ultimately prices of these commodities.


Consumer capital is also beneficial in improving long lasting brand image. It also promotes division of labour which in turn encourages specialisation in industries such as automotive manufacturing. The backdrop of such a method could be that it leads to an addiction cycle rather than healthy enjoyment of the use of those products.

As a result, the society has to deal with hyper consumption.

Entrepreneurs need to understand consumer behaviour regarding the segment they are catering and work towards developing a new offering within the same space that the consumers cannot ignore.

Eco-friendly products are one of the most popular used methods to promote consumer capitalism in today’s world along with credit purchasing.




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