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