The economics of customer loyalty and performance marketing

Traditional microeconomic theory puts price at the center of consumer decision-making. However, a new understanding of consumer choice has emerged from behavioral economics that shows that the price/ utility model is wildly simplistic. Empirical research in this area has demonstrated that relative value, as opposed to absolute cost, plays a dominant role in consumer choice and has significant implications for business strategies. Professional marketers have known this for years and focus on how to deliver the value customers are looking for while building all-important brand loyalty.

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