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A strategic approach to target marketing-choosing the preferred generic customer : a model of shareholder value performance

Errey, Robert and Oppenheim, Peter 2005, A strategic approach to target marketing-choosing the preferred generic customer : a model of shareholder value performance, in ANZMAC 2005 : Broadening the boundaries, conference proceedings, University of Western Australia, School of Business, Perth, W.A..

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Title A strategic approach to target marketing-choosing the preferred generic customer : a model of shareholder value performance
Author(s) Errey, Robert
Oppenheim, Peter
Conference name Australian & New Zealand Marketing Academy. Conference (2005 : Fremantle, Western Australia)
Conference location Fremantle, Western Australia
Conference dates 5-7 December 2005
Title of proceedings ANZMAC 2005 : Broadening the boundaries, conference proceedings
Editor(s) Purchase, Sharon
Publication date 2005
Conference series Australian and New Zealand Marketing Academy Conference
Publisher University of Western Australia, School of Business
Place of publication Perth, W.A.
Keyword(s) generic customer groups
customer acquisition
customer retention
new business
business shedding
customer shedding
shareholder value
Summary In recent years the contribution of the marketing function has changed and interest now centres on its contribution to a firm’s financial performance. The Marketing Science Institute in the USA has stated that it is the number one marketing issue facing corporate America. The Australian Marketing Institute is promoting a set of marketing metrics that will help Australian firms measure the function’s contribution to shareholder value creation. Much of the literature relates notions such as customer satisfaction and other marketing activities with a firm’s profit. A missing link appears to be the choice firms make in terms of which customer groups to target and the resultant impact on shareholder value performance. The generic customer groups comprise: existing customers, former customers and prospects. A review of the literature reveals that marketing costs and benefits vary across these groups. The challenge for management is to determine which group represents the best target and to allocate scarce marketing resources accordingly. The task is made even more challenging because the economic value of members within each group also varies and some product lines may be unprofitable and therefore, may not be worth pursuing. To generate superior shareholder value it may not simply be the case of acquiring the maximum number of new customers from any source but to find the appropriate mix of the generic customer groups and manage the individual customer relationships accordingly. This paper seeks to firstly summarise and review the recent literature on marketing and its relationship to shareholder value and secondly to propose a model for allocating marketing resources across generic customer groups in order to generate improved shareholder value performance. Importantly, the model not only covers increasing business with customers but also shedding customers or shedding the extent of business conducted with customers as means of generating shareholder value.
ISBN 064645546X
9780646455464
Language eng
Field of Research 150599 Marketing not elsewhere classified
HERDC Research category E1 Full written paper - refereed
Copyright notice ©2005, ANZMAC
Persistent URL http://hdl.handle.net/10536/DRO/DU:30009727

Document type: Conference Paper
Collection: Deakin Graduate School of Business
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