Business Intelligence

Customer Value Elasticity, Equi-Value Curves And Value Vectors: Implications For Customer Behaviour And Strategic Marketing

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Executive Summary

The analysis presented in the paper uses algebraic and geometric methods to explore the implications of the two different specifications of the customer's value equation, the ratio approach and the subtractive approach, for customer behaviour and strategic marketing decisions. Three key concepts are defined and investigated for each specification of the customer's value equation: Customer value elasticity, equi-value curves (or "Iso-values"), and value vectors. Customer value elasticity measures the sensitivity of customer value to small changes in customer perceived benefits and sacrifices.

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