Modeling Strategic Opportunities in Product-Mix Strategy: A Customer- Versus Product-Oriented Perspective

James N. Cannon, Hugh M. Cannon

Abstract


There has been significant research appearing in the marketing literature regarding the importance of measuring customer lifetime value (CLV) and its consequence, customer equity (CE). One of the implications of taking a CE approach is an increased emphasis on product mix. Once marketers establish CE as a metric of success, they create incentives for managers to increase it by selling more products to the same customers. While the literature has addressed how these incentives might be incorporated into simulation games, it has not addressed how games should be structured to confront participants with strategic alternatives where the incentives are relevant. This paper addresses this situation, outlining critical product-mix conditions developers might incorporate into a game to provide players with meaningful strategic choices related to Rust, Zeithaml, and Lemon’s (2000) “profitable product death spiral†paradigm.

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