Helping your consumers to gain more profits

Consumers are individuals or households that consume goods and services generated within the economy. Since this includes just about everyone, the term is a political term as much as an economic term when it is used in everyday speech.

Typically when business people and economists talk of consumers they are talking about person as consumer, an aggregated commodity item with little individuality other than that expressed in the buy not buy decision.

However there is a trend in marketing to individualize the concept. Instead of generating broad demographic profile and psychographic profiles of market segments, marketers are engaging in personalized marketing, permission marketing, and mass customization.

A consumer is assumed to have a budget which can be spent on a range of goods and services available on the market. Under the assumption of rationality, the budget allocation is chosen according to the preference of the consumer, i.e. to maximize his or her utility function.

In ‘time series’ models of consumer behavior, the consumer may also invest a proportion of their budget in order to gain a greater budget in future periods. This...