Chapter 3

Question 1

All customers change

Answer 1

Even after customers are assigned to a segment, their needs continue to evolve, at different rates and in different directions, so at some point in the (near) future, the customers in a once homogeneous segment will develop very different preferences.

Question 2

Sources of customer dynamics

Answer 2

1. Discrete life events
2. Typical lifecycle maturation as people age
3. Product/customer learning effects
4. Product lifecycle
5. Changes in external environment

Question 3

Customer learning effect

Answer 3

The process by customers become familiar with the product by using it, which changes their weighting of the relative importance of difference attributes due to enhanced knowledge and experience.

Question 4

Product lifecycle

Answer 4

Captures prototypical changes in customers’ purchase criteria and marketers’ actions as the product category matures.

Question 5

Lifecycle approach

Answer 5

1. Customer lifecycle: Customers change as they age and reach common milestones
2. Product lifecycle: Introduction, growth, maturity, decline
3. Industry lifecycle: Establishment of boundaries, innovation stage, maturation, decline
4. Learning effect: Consumer and product lifecycle effeccts

Question 6

AER model

Answer 6

1. Acqusition stage: begins with the first contact, before the purchase occurs when customers start to learn about the offerings and how to interface with this firm.
2. Expansion stage: firms are trying to upsell or cross-sell to expand their sales and engagement with existing customers
3. Retention stage: deals with customers who migrate because of the mismatch in the core offering or a life event or just because of the tendency to switch.

Question 7

Customer lifetime value (CLV) approach

Answer 7

Attempts to capture the true contribution of each customer, by determining the discounted value of the sales and costs associated with this customer across the expected migration paths followed throughout the relationship with the firm.