Conducting a Pricing Transactional Assessment, Integrating Cluster and Segments Analyses, To Leverage the Customer Profitability
Downloads
The profitability set per customer of a given organization implies several challenges, from the calculation of the net pricing to the development of a cost allocation system within the company's main processes. Thus, the work proposed aims at exploring the potential of a customer evaluation methodology, using pricing techniques as a supporting tool, where the analysis of customer clusters will be done. We aim to identify profitability patterns, according to the customer's supply chain role, the dimension and the potential of the business, the types of transactions frame that are established, as well as the relative effects of each cluster own characteristics in the overall business relationship. After developing the methodology, the customer profitability analysis will be performed and recommendations will be set, highlighting and quantifying the possible improvements in the contribution. The use of leveraging techniques by the average and sensitivity analysis will support the recommendations. These insights will drive the companies in their pricing decisions also as shifting their focus towards attracting and retaining the customers from the more profitable clusters.
Albalaki, Faeq. (2018). Customer Profitability Analysis, Cost System Purposes and Decision Making Process: A Research Framework. Account and Financial Management Journal.
Bodea, T. & Ferguson, Mark. (2014). Segmentation, revenue management, and pricing analytics. Segmentation, Revenue Management and Pricing Analytics. 1-256. 10.4324/9780203802151.
Braithwaite, A. and Samakh, E. (1998), “The cost-to-serve method”, International Journal of Logistics Management 9(1):69-84.
DOI: 10.1108/09574099810805753
Brown, L. (2010). Customer profitability analysis. Profit Analytics Ltd.
Cardoş, I. R., & Cardos, V. D. (2014). Measuring customer profitability with activity-based costing and balanced scorecard. Annales Universitatis Apulensis-Series Oeconomica –
https://ideas.repec.org/a/alu/journl/v1y2014i16p5.html
Cokins, G. (2015). Measuring and managing customer profitability. Strategic Finance, 96(8), 23-27.
Cooper, R., & Kaplan, R. S. (May-June of 1991). Profit priorities from Activity-Based Costing. Harvard Business Review, pp. 130-135.
Elias, N., & Hill, D. (2010). Customer profitability management. Montvale: Institute of Management Accountants.
Epstein, M. J., M. Friedl and K. Yuthas. 2008. Managing customer profitability. Journal of Accountancy (December): 54-60.
Erjavec, Hana & Dmitrovic, Tanja & Povalej, Petra. (2016). Drivers of customer satisfaction and loyalty in service industries. Journal of Business Economics and Management. 17. 810-823.
3846/16111699.2013.860614.
Foster, G., Gupta, M., & Sjoblom, L. (1996). Customer Profitability Analysis: Challenges and New Directions. Journal of Cost Management, 10 (Spring), 5– 17.
Guerreiro, Reinaldo & Bio, Sérgio & Merschmann, Elvira. (2008). Cost-to-serve measurement and customer profitability analysis. International Journal of Logistics Management, The. 19. 389-407.
Lahutta, Dawid & Wroński, Paweł. (2014). The influence of the Cost-to-Serve methodology on customer profitability. Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu.
Lee, J. H., & Park, S. C. (2005). Intelligent profitable customers segmentation system based on business intelligence tools. Expert Systems with Applications, 29, 145–152
Johnson, E., Simonetto, M., Meehan, J., & Singh, R. (2009). How profitable are your customers... really? (D. D. LLC, Ed.) Delloit Review Issue 5, pp. 5-15.
Kaplan, R.S, and Cooper, R. (1998), Cost and Effect: Using Integrated Cost System to Drive Profitability, Harvard Business School Press, Boston, MA
Marn, M., & Rosiello, R.L. (1992). Managing price, gaining profit. Harvard business review, 70 5, 84-94.
Marn, M., Roegner, E., & Zawada, C.C. (2004). The Price Advantage.
McManus, L., & Guilding, C. (2008). Exploring the potential of customer accounting: a synthesis of the accounting and marketing literatures. Journal of Marketing Management.
Miller, John A. (2008), “Customer Profitability”, Wiley InterScience, (5/6): 63-68,
doi: 10.1002/jcaf.20404.
Mulhern, Francis J. (1999). “Customer profitability analysis: measurement, concentration, and research directions”, Journal of Interactive Marketing, 13 (1): 25-40.
Nagle, T. T., Hogan, J. E., & Zale, J. (2011). The strategy and tactics of pricing: A guide to growing more profitably.
Noone, Breffni e Griffin, Peter (1998). Development of an Activity-based Customer
Ponikvar, Nina & Rant, Melita. (2007). Firm specific determinants of markup ‐ the case of Slovenian manufacturing firms. Journal of Business Economics and Management. 8. 203-212. 10.3846/16111699.2007.9636170.
Profitability System for Yield Management, Faculty of Tourism and Food, Dublin Institute of Technology, Res. 4, 279-292.
Shapiro, B. P., Rangan, V. K., Moriarty, R. T., & Ross, E. B. (1987). Manage customers for profits (not just sales). Harvard Business Review, 65(5), 101-108
Stubing, David P., (2019). Measuring and managing customer profitability: Implications for identifying and managing unprofitable customers. College of Business Theses and Dissertations. 8.
Van Raaij E., Vernooij M. J. A., van Triest S., 2003. The implementation of customer profitability analysis: a case study, Industrial Marketing Management, 32, pp. 573-583
Wu, J. and Zheng, L. 2005. “Research on customer segmentation model by clustering”. In E-Technology, e-Commerce and e-Service, 2005. EEE ‘05. Proceeding, v- xiv from the 2005 IEEE International Conference Hong Kong 29 March-1 April 2005
