Principles of Marketing
Consumer Buying Behavior
Consumer Markets and
Consumer Buying Behavior
Consumer behavior is the actions a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions
Consumer Buying Behavior refers to the buying behavior of final consumers individuals & households who buy goods and services for personal consumption.
Prof. P.V. Balakrishnan
All these consumers make up the consumer market.
The central question for marketers is:
“How do consumers respond to various marketing efforts the company might use?”
1
CB-2
Value of Customers
1.
Lifetime Customer Value
Transaction basis
a)
b)
1.
Views each individual interaction as unique
Calculate value of transaction
Focuses firms’ efforts on retaining most valuable asset
(Customers)
2.
Increases efforts towards long-term goals
Assess costs involved with customer acquisition
3.
Primary risk is overestimation of retention rates
Margin – Acquisition costs
4.
Four things are needed to successfully utilize LCV
Determine margin on goods sold
Lifetime Customer Value
a)
Unique customer identification
a)
Views each customer as an asset or a series of interactions
b)
Customer purchase history
b)
2.
Calculate value of customer
c)
Customer communication data
d)
Accurate cost information
Determine acquisition and response rates
Cumulative Customer Profit
$
Compute relevant costs
1
Use acquisition and retention rates to compute lifetime customer value 2
3
4
5
Year
CB-3
Model of Buyer Behavior
Marketing and
Other Stimuli
Buyer’s Black Box
Marketing
Buyer Characteristics
Buyer Decision Process
Product
Price
Place
Promotion
Other
Economic
Technological
Political
Cultural
CB-4
Factors Influencing Consumer Behavior
Buyer Responses
Cultural
Social
Social
Product Choice
Consumer Markets and
Consumer Buying Behavior
Consumer behavior is the actions a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions
Consumer Buying Behavior refers to the buying behavior of final consumers individuals & households who buy goods and services for personal consumption.
Prof. P.V. Balakrishnan
All these consumers make up the consumer market.
The central question for marketers is:
“How do consumers respond to various marketing efforts the company might use?”
1
CB-2
Value of Customers
1.
Lifetime Customer Value
Transaction basis
a)
b)
1.
Views each individual interaction as unique
Calculate value of transaction
Focuses firms’ efforts on retaining most valuable asset
(Customers)
2.
Increases efforts towards long-term goals
Assess costs involved with customer acquisition
3.
Primary risk is overestimation of retention rates
Margin – Acquisition costs
4.
Four things are needed to successfully utilize LCV
Determine margin on goods sold
Lifetime Customer Value
a)
Unique customer identification
a)
Views each customer as an asset or a series of interactions
b)
Customer purchase history
b)
2.
Calculate value of customer
c)
Customer communication data
d)
Accurate cost information
Determine acquisition and response rates
Cumulative Customer Profit
$
Compute relevant costs
1
Use acquisition and retention rates to compute lifetime customer value 2
3
4
5
Year
CB-3
Model of Buyer Behavior
Marketing and
Other Stimuli
Buyer’s Black Box
Marketing
Buyer Characteristics
Buyer Decision Process
Product
Price
Place
Promotion
Other
Economic
Technological
Political
Cultural
CB-4
Factors Influencing Consumer Behavior
Buyer Responses
Cultural
Social
Social
Product Choice