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1 – 10 of over 1000The purpose of this paper is to investigate how firms attempt to increase the profitability of specific groups of extant customers by achieving adjustments in customer behaviour…
Abstract
Purpose
The purpose of this paper is to investigate how firms attempt to increase the profitability of specific groups of extant customers by achieving adjustments in customer behaviour that consequently lead to reduced costs associated with serving these customers.
Design/methodology/approach
The paper takes the form of multiple case studies in the retail banking sector. Three specific initiatives launched by European retail banks for the stated (partial) purpose of modifying customer behaviour in order to reduce customer‐related costs are evaluated.
Findings
The findings from the three case studies show that strategies that aim to modify customer behaviour in a positive way can successfully decrease the costs of interacting with customers while at the same time maintaining and even increasing customer retention and customer‐related revenues.
Research limitations/implications
This study is limited to an assessment of three initiatives carried out by three European banks. The findings bring the issue of costs into customer relationship management in a constructive manner, abandoning the view of cost reductions as a necessary evil or drastic measure to handle problematic customers.
Practical implications
Marketing and customer relationship managers who consider strategies to change customer behaviour in a cost‐reducing way as a complement to traditional revenue and loyalty enhancement strategies will expand their opportunities to achieve increases in customer lifetime value (CLV) and customer equity (CE).
Originality/value
The paper reclaims the management of costs as a key customer management activity, thereby answering calls for more attention to cost issues in marketing.
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The specific purpose of this article is to describe customer profitability analysis and evaluate its compatibility with quality management systems. Besides, its more general…
Abstract
Purpose
The specific purpose of this article is to describe customer profitability analysis and evaluate its compatibility with quality management systems. Besides, its more general objective consists in shedding further light on the links between management accounting and quality management, which is still an emerging topic.
Design/methodology/approach
The first part of the document presents a theoretical description of the disciplines and tools that are relevant to the study. Afterward, an explanation of the way in which customer profitability analysis is operationalized in practice is provided. Subsequently, a framework for the incorporation of customer profitability analysis into a quality management system is introduced. The final section includes some recommendations for future research.
Findings
Through the analysis of the benefits of the incorporation of customer profitability analysis into an ISO 9000 model, the study provides further support to the premise that the joint consideration of management accounting techniques and quality management tools is beneficial to organizations.
Originality/value
The article combines two disciplines closely related in practice but seldom concurrently addressed in the literature.
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A review of the literature of quality‐related costs indicates the domination of the prevention‐appraisal‐failure categorisation of costs, a similar pre‐occupation with in‐house…
Abstract
A review of the literature of quality‐related costs indicates the domination of the prevention‐appraisal‐failure categorisation of costs, a similar pre‐occupation with in‐house costs and little consideration of supplier and customer‐related costs. Most of the data are of questionable value because not suitably qualified by detailing inclusions and methods of computation, and there is scant coverage of measurement and cost collection, or warnings of limitations in costing exercises. Failure to discuss definitions, and lack of guidance on cost collection and treatment of overheads and valuation of scrap are all notable omissions in the literature so far.
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The purpose of this paper is to examine the moderator effects of switching costs, classified by type (relational, procedural, and financial) and direction (positive and negative)…
Abstract
Purpose
The purpose of this paper is to examine the moderator effects of switching costs, classified by type (relational, procedural, and financial) and direction (positive and negative), on the relationships between customer-perceived value, trust, and loyalty.
Design/methodology/approach
This study reports on quantitative data from a survey of two service contexts which vary in their degree of customer-employee contact and customization. In total, 360 usable questionnaires were collected, and the data were analyzed using multi-group structural equation modeling.
Findings
The results demonstrate that switching costs moderate, in different ways, the relationships between customer loyalty, trust and perceived value. Moreover, the strength of the moderator effects vary according to service type.
Research limitations/implications
This study provides new insight into understanding the moderating role of switching costs thus, reduces inconsistencies about the direction and the strength of the moderator effect of switching costs in loyalty frameworks.
Practical implications
This study helps managers choose the most effective loyalty strategy for specific service industries and perceptions of switching costs, and to look beyond their service boundaries in order to cross-fertilize strategies for handling switching costs.
Originality/value
No empirical study to date has simultaneously examined the moderator effect of switching costs classified by type and direction on the relationships between customer-perceived value, trust, and customer loyalty across two different service contexts in a single framework.
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Hans H. Bauer and Maik Hammerschmidt
Synthesis of the customer lifetime value and the shareholder value (SHV) approach in order to develop an integrated, marketing‐based method for corporate valuation.
Abstract
Purpose
Synthesis of the customer lifetime value and the shareholder value (SHV) approach in order to develop an integrated, marketing‐based method for corporate valuation.
Design/methodology/approach
Discusses the limitations and assumptions of existing methods to estimate customer value components and examines the limitations of the SHV concept. By linking the customer equity (CE) and the SHV approach, a formal model to calculate corporate value is developed. The discounted cash flow method is used for modelling the profit streams.
Findings
Provides formulas for the estimation of both the individual lifetime value of a customer and CE. Provides a comprehensive model to estimate corporate value based on customer‐related cash flows and traditional financial metrics. Introduces typical cases, in which the use of a customer‐based valuation seems beneficial. Illustrates how our approach can be applied by using a simple case study on M&A in the telecommunication industry. Gives suggestions on how to obtain the necessary data, partially even from publicly available sources.
Research limitations/implications
Advancement of the quantitative techniques for modelling the customer value components would allow for relaxing some restrictive assumptions. The explicit modelling of the future growth of the customer base (the acquisition rate) would increase the applicability of the model. Additionally, taking into account heterogeneity within the customer cohorts is a task for future research. Finally, our model needs to be applied more extensively using real data for the input variables.
Practical implications
A CE‐based valuation approach can guide marketing investments and helps to avoid misallocation of resources. Based on an example in the field of M&A, we demonstrate the usefulness of the approach for obtaining a realistic indicator of firm value. It helps to assess whether an acquisition is economically sensible. We provide evidence for the superiority of a customer‐based approach over traditional financial methods.
Originality/value
While the traditional SHV method considers cash flows at a highly aggregated level, our approach employs disaggregated cash flows on the level of individual customers. Thereby we do incorporate the lifetime values of future customers by considering different cohorts. We do capture customer defection by incorporating retention rates. Our model enables a more detailed and valid estimation of corporate value by accounting for the single customer activities that drive marketing actions. This enables a better forecasting of the free cash flow. Incorporating customer‐related drivers into financial valuation models makes easier to assess the return on marketing investments.
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Malcolm Smith and Shane Dikolli
Recent innovations in management accounting have emphasized acustomer focus and the requirement of remaining competitive throughsatisfying customer needs. In so doing they have…
Abstract
Recent innovations in management accounting have emphasized a customer focus and the requirement of remaining competitive through satisfying customer needs. In so doing they have largely overlooked the dual requirement that customers should satisfy the strategic needs of the supplier. Examines customer profitability analysis (CPA) as a tool for the evaluation of the portfolio of customer profiles, and suggests that activity‐based costing may facilitate the success of CPA implementation.
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Dipayan Biswas and Bidisha Burman
The purpose of this paper is to examine how a product‐related variable like digitalization and a market‐related variable like price dispersion might differentially influence…
Abstract
Purpose
The purpose of this paper is to examine how a product‐related variable like digitalization and a market‐related variable like price dispersion might differentially influence consumer search intentions across offline versus online shopping interfaces, and how this relationship might be mediated by consumers' perceived risks. Prior research findings are extended and examines how the perceived risk – search intention relationship might be different in online contexts. The distinction is drawn between perceived performance risk versus perceived transaction risk and examines how each of these risks would differentially influence search intentions across the two shopping interfaces (offline versus online).
Design/methodology/approach
Two experimental studies are conducted.
Findings
Study 1 shows that under conditions when perceived performance risks are enhanced, such as for non‐digitalized (versus digitalized) products, consumers' search intentions are enhanced, with the effects getting magnified in online shopping interfaces. In Study 2, the effects of a condition are examined when instead of performance risks, transaction risks are enhanced by a market‐related variable – price dispersion. The results of Study 2 show that when there is higher price dispersion in the marketplace, in the offline environment, participants have higher search intentions, while in the online environment, participants have lower search intentions. In addition, the effects of price dispersion on search intention in the online environment are mediated by perceived transaction risk.
Originality/value
Limitations of the studies suggest that future research may extend these findings to include non‐student samples, differential search costs, customer‐related factors like trust and involvement, other types of risks like social and psychological, social networking sites, and multichannel search behaviors.
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Swapnarag Swain, Charles Jebarajakirthy, Haroon Iqbal Maseeh, Raiswa Saha, Nimit Gupta and Rajni Grover
This study aims to systematically review the permission marketing (PM) literature by synthesising research papers in this domain.
Abstract
Purpose
This study aims to systematically review the permission marketing (PM) literature by synthesising research papers in this domain.
Design/methodology/approach
This study adopted a hybrid review method comprising structured literature review and lexicometric analysis.
Findings
This study examines the development of PM research over time in terms of contexts, methods and theories. Further, this review proposes a conceptual framework showing the relationships between the antecedents, mediators, moderator and consequences reported in the PM literature.
Practical implications
This review gives critical insights for implementing permission-based marketing campaigns.
Originality/value
This systematic review synthesised literature on PM domain. Further, this study provides directions with respect to alternative theories, context, characteristics and methods to extend research on this domain.
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The purpose of this article is to present an approach and a case that shows how activity‐based costing (ABC) and economic profit (EP) can be used to improve the profitability of a…
Abstract
Purpose
The purpose of this article is to present an approach and a case that shows how activity‐based costing (ABC) and economic profit (EP) can be used to improve the profitability of a company.
Design/methodology/approach
The objectives of the article are achieved primarily through the discussion of a case combined with a few literature references. The subjects are forecasting, ABC, EP and the approach to the topic is mainly a case study.
Findings
On the theoretical side it seems evident that combining ABC and EP is a good idea for a variety of purposes. In the case study. numerous practical findings for the specific company are also presented.
Research limitations/implications
From a research perspective it is clear that we cannot judge from this article whether combing ABC and EP is smart in all cases or not.
Practical implications
The article clearly shows that ABC and EP can be combined with great results (at least) in some cases. The article also addresses some insight that might be useful for many practitioners.
Originality/value
The value of this article lies in providing a clear and real case for why and how to combine ABC and EP. As far as I know the value offered by this article is quite unique. The article's audience is practitioners as well as academics.
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Presents an educational model that has been developed to evaluate investments in small hospitality operations. Developed in the context of small businesses in Turkey, the model…
Abstract
Presents an educational model that has been developed to evaluate investments in small hospitality operations. Developed in the context of small businesses in Turkey, the model presents a systematic approach to evaluating the feasibility of small bed and breakfast hotel investments. Evaluates investment alternatives using discounted cash flow techniques as the user enters inputs with respect to the variables influencing the net cash flows. Observes changes in the value of the investment as any of the input variables are changed or as new scenarios are developed. Believes that such an approach is expected to increase understanding of investment analysis and contribute to education and decision process of small investors who usually lack the means for formal feasibility studies.
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