Professional Documents
Culture Documents
MARKETING DISCUSSION
Consider the lifetime value of customers (CLV). Choose a business and show how you would
go about developing a quantitative formulation that captures the concept. How would
organizations change if they totally embraced the customer equity concept and maximized
CLV?
Suggested Response
A) CLV describes the net present value of the stream of future profits expected over the
customers’ lifetime purchases. Each student’s example will differ but the main tenets of each
report should include the following:
1) Add:
a) Profit from a sale (dollar or percent).
b) Number of sales per customer per year.
c) Average age of a customer.
d) Average expected lifespan of a customer.
2) Subtract:
a) Appropriate discount rate.
b) Costs of attracting one customer.
c) Selling one customer.
d) Servicing one customer.
Discussion Questions:
1)What have been the key success factors for Dell?
a. Dell information about its customers.
b. Its production process.
c. JIT inventory practices.
2)Where is Dell vulnerable?
a. Changes in usage of computers.
b. Changes in technology that makes the personal computer obsolete.
c. A lapse of marketing research caused by corporate changes or financial
setbacks.
3)What should it watch out for?
a. Corporate complacency due to success.
b. The effectiveness of its marketing research in identifying emerging trends.
c. The temptation to expand into other consumer products outside of its core
competencies.
4)What recommendations would you make to senior marketing executives going
forward?
a. Accept your competencies, accept your limitations, and capitalize on your
strengths.
b. Continue to believe that marketing research is the underlying foundation of
your product development processes and marketing successes.
5)What should they be sure to do with their marketing?
a. Continue to target their marketing to identify those segments of the total
market that are receptive to new and innovative products and ideas.
DETAILED CHAPTER OUTLINE
Q1. What are customer value, satisfaction, and loyalty, and how can
companies deliver them?
ANSWER
Today, companies face their toughest competition ever. The cornerstone of a well-
conceived marketing orientation is strong customer relationships. Marketers must
connect with customers—informing, engaging, and energizing them in the process.
Customer Expectations
A) How do buyers form their expectations?
1) From past buying experiences.
2) Friends and associates advice.
3) Marketers’ and competitors’ information and promises.
A customer’s decision to be loyal or to defect is the sum of many small encounters with
the company.
Companies need to create a “branded customer experience.”
Customer Lifetime Value (CLV) describes the net present value of the stream of future
profits expected over the customer’s lifetime purchases.
CLV calculations provide a formal quantitative framework for planning customer
investment and helps marketers to adopt a long-term perspective.