Incorporating Strategic Product-Mix Decisions into Simulation Games: Modeling the “Profitable-Product Death Spiral”

Abstract

There has been significant research appearing in the marketing literature regarding customer lifetime value (CLV) and its consequence, customer equity (CE), over the past decade. However, little has been done to incorporate these concepts into the literature on simulation and gaming. One of the implications of taking a CE approach is an increased emphasis on product mix. This paper discusses a simple method for incorporating strategic product-mix decisions into marketing simulation games. It illustrates the importance by showing how this addition will model Rust, Zeithaml, and Lemon’s (2000) concept of the Profitable-Product Death Spiral into a CLV design developed by Cannon, Cannon, and Schwaiger (2005).