The document discusses 5 major forces placing pressure on companies: customer retention, shift to service-based differentiation, one-to-one marketing, expanded product diversity, and power shifting to customers. It emphasizes the importance of understanding customer costs, profitability, and lifetime value in order to prioritize high-value customers and make strategic marketing decisions. Customer lifetime value (CLV) treats each customer as an investment and focuses on the long-term profit stream from customers, helping companies evaluate marketing ROI and target attractive new customers.

1. Customer Value Rajnish Kumar

4. Expanded product diversity, variation and customization As product and service-lines proliferate, such as new colors or sizes, complexity increases. As a result, more indirect expenses (i.e., overhead costs) are needed to manage the complexity; and indirect ex­penses are increasing at a relatively faster rate than direct expense. Activity Based Costing traces and assigns costs based on cause-and-effect relationships. This does not mean that an increase in overhead costs is a bad thing. It simply means that a company is required to invest and spend more on expanded product offerings and services to increase its customers’ satisfaction. Power shift to customers. The Internet is shifting power—irreversibly—from sellers to buyers. Thanks to the Internet, B2C consumers and B2B purchasing agents can more efficiently explore more shopping options and more easily educate themselves. Customers have an abundance of options; and now they can get information about products or ser­vices that interest them in a much shorter amount of time. The customer is in control more than ever. Consequently, from a supplier’s perspective, customer retention becomes even more critical and treating customers as “a lifetime stream of revenues” becomes para­mount

5. What’s the big deal ?

6. Promotion mix Price – Big Bazaar West Side –Affordable style Vishal Mega - ? Featuring offers/ Temporary Price cuts How ? Long term impact/ Positioning the Retailer Short Term Awareness/ Sales Increase Why ? National TV Newspaper Flyer

14. Determinants of CLV