Question.2073 - Consider the lifetime value of customers (CLV). Choose a business and show how you would develop a quantitative formulation that captures the concept. How would that business change if it embraced customer equity and maximized CLV? Expand on this concept because marketers increasingly develop sophisticated programs tailored to specific target market segments. These targeted programs maximize customer equity and lifetime value and attempt to be relevant to particular consumer groups. However, these efforts are also exploitative and take advantage of vulnerable customers. An example is the preponderance of marketing of cigarettes, alcohol, and other vices in low-income areas. Do you think that such effective target marketing programs are a positive or an unfavorable trend? Module 3 Assignment Instructions: Describe your example of an effective CLV Develop your position on tailoring specific target market segments Support your ideas with data and reputable references. Please post your initial response by 11:59 PM on Thursday. After your posting, please engage in co production for this discussion topic. Provide comments on the posts of at least two classmates by 11:593/28/24, 2:22 PM Topic: Module 3: Assignment - Targeting customers and market precision - Discussion Group 3 https://canvas.uncp.edu/groups/16747/discussion_topics/460910 2/5 PM on Sunday. Active engagement is necessary for learning. Share knowledge gained and any sources and information you can contribute to the discussion. Rubric: The discussion assignments have a rubric. To view the evaluation criteria, click on the three dots on the top right of this page, as shown in the screenshot below. Human Reasoning versus Artificial Intelligence Notice: The following material is not a course requirement. I am providing it to observe the current state of Artificial Intelligence (AI) tools for marketing and decision-making. Spoiler alert: If you were to put the assignment prompt in ChatGPT, it would not give you a good answer. AI-generated text often includes incorrect facts and does not include the detailed data and information (with sources) required for these answers. The ChatGPT 3.5 module 3 assignment is copied and pasted below. I am including two parts of this assignment to show that your "human" contribution should be better than a machine's. There is a grammar error that can be overlooked, but note that the Chat GPT contribution needs references and needs to address the rubric components fully. Both of these elements are essential requirements for your contributions. Perhaps the problem with the simple answers to the questions is that I did not inform ChatGPT of the evaluation criteria and rubric. However, this can be incorporated into the prompt the next time!3/28/24, 2:22 PM Topic: Module 3: Assignment - Targeting customers and market precision - Discussion Group 3 https://canvas.uncp.edu/groups/16747/discussion_topics/460910 3/5 Consider the lifetime value of customers (CLV). Choose a business and show how you would go about developing a quantitative formulation that captures the concept. How would that business change if they totally embraced the customer equity concept and maximized CLV? One example of a business that could benefit from a focus on customer lifetime value (CLV) is an online clothing retailer. Here's how I would develop a quantitative formulation for CLV: Calculate the average purchase value: Determine the average amount that a customer spends on each purchase, including the cost of the items as well as any associated fees, such as shipping and handling. Calculate the purchase frequency rate: Determine how often customers make purchases. This can be calculated by dividing the total number of orders by the total number of unique customers. Calculate the customer value: Multiply the average purchase value by the purchase frequency rate to determine the average customer value. Calculate the customer lifespan: Determine the average amount of time that a customer remains active with the company. This can be calculated by dividing the total number of months that customers have been active by the total number of unique customers. Calculate the CLV: Multiply the customer value by the customer lifespan to determine the customer lifetime value. If the company were to fully embrace the customer equity concept and maximize CLV, they would focus on building strong, long-lasting relationships with their customers. This could include initiatives such as: Offering personalized recommendations: The company could use data analytics to provide personalized product recommendations based on a customer's previous purchases and preferences, which would increase the likelihood of repeat purchases. Providing exceptional customer service: By offering excellent customer service, the company could build a positive reputation and increase customer loyalty. Implementing loyalty programs: The company could offer loyalty programs that reward customers for their repeat business, such as discounts, free shipping, or exclusive access to new products.3/28/24, 2:22 PM Topic: Module 3: Assignment - Targeting customers and market precision - Discussion Group 3 https://canvas.uncp.edu/groups/16747/discussion_topics/460910 4/5 Improving the customer experience: The company could invest in improving the overall customer experience, such as by offering easy-to-use online ordering and return processes, fast shipping, and clear and accurate product descriptions. By focusing on maximizing CLV through these and other initiatives, the company could not only increase revenue from repeat business but also build a loyal customer base that would be more likely to refer others to the company, further increasing its customer equity. Question: Expand on this concept because marketers are increasingly developing sophisticated programs tailored to certain target market segments. These programs maximize customer equity and lifetime value and are an attempt to be relevant to certain consumer groups. However, these efforts are also exploitative and take advantage of vulnerable customers. For example, the preponderance of marketing of cigarettes, alcohol, and other vices in low-income areas. Do you think that such effective target marketing programs are a positive or an unfavorable trend? Effective target marketing programs can be both positive and unfavorable, depending on how they are used. On the one hand, targeted marketing programs can help businesses better understand and serve the needs of specific consumer groups, which can increase customer satisfaction and loyalty. By tailoring marketing efforts to specific market segments, businesses can deliver more relevant messages and product offerings that resonate with consumers and meet their unique needs. However, there is also a darker side to targeted marketing programs, especially when they are used to exploit vulnerable customers. As you mentioned, the marketing of vices like cigarettes and alcohol in low-income areas can be seen as exploitative, as these populations may be more susceptible to addiction and other negative health outcomes. Similarly, targeted marketing of high-interest loans or other financial products to individuals with poor credit can take advantage of their financial vulnerabilities and trap them in a cycle of debt. In addition, targeted marketing programs can also reinforce existing social inequalities and stereotypes. For example, if a business only markets their products to certain racial or ethnic groups, it can perpetuate harmful stereotypes and further marginalize these populations. Therefore, it is important to consider the ethical implications of targeted marketing programs and ensure that they are not being used to exploit or harm vulnerable3/28/24, 2:22 PM Topic: Module 3: Assignment - Targeting customers and market precision - Discussion Group 3 https://canvas.uncp.edu/groups/16747/discussion_topics/460910 5/5 ? Reply ? Attach Replies are only visible to those who have posted at least one reply. populations. Marketers and businesses should be mindful of their impact on society and work to develop marketing strategies that are both effective and ethical. This may include setting responsible marketing guidelines and incorporating social responsibility into their marketing strategies. Ultimately, the goal should be to create marketing programs that maximize customer equity and lifetime value while also contributing to a more equitable and just society.
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Customer Lifetime Value – Discussion Post CLV, that is Customer Lifetime Value, refers to a measurement of business which describes how a company can earn from its customers through the relationship they have made in their lifetime. It is the income of business that it expects from its retained customers. A company spends a specific amount on its customers and it is assumed that how much company can earn from that expenditure made in the lifetime (Danao, 2023). The best method to measure CLV is through average revenue generated from customer and the total average profit earned by company. Measuring CLV of a business is very important to understand viability of market and helps in making effective marketing strategies. Formula to calculate CLV = Customer Value * Average Customer Lifespan in a company Here, if we talk about Netflix, the company provides a platform for its customers where they can watch different kinds of movies, web series for entertainment purposes. For this, the company charge a specific amount from its customers which is called subscription. Netflix has estimated an average lifespan of a subscriber and that is 25 years (research.netflix.com, 2022). So, the lifetime value of each customer is estimated at $291.25. With the help of customer equity and improved CLV, business can retain its customers for more years and also improves reputation of company in the market. With the help of target marketing, company finds out those customers who are most potential for a business and can be joined with the company for a long time period. For this, market is divided into different segments as per age, region, demographics and other factors. After that, marketing strategies are developed as per the nature of each segment to target the intended audience. These kinds of target marketing programs are very helpful for a company in identifying the most reliable customers that will help in increasing CLV of the company. Reference – Research.netflix.com, 2022, Beyond Customer Lifetime Valuation : Measuring the value of Acquisition and Retention for Subscription Services, https://research.netflix.com/publication/Beyond%20Customer%20Lifetime%20Valuation%3A%20Measuring%20the%20Value%20of%20Acquisition%20and%20Retention%20for%20Subscription%20Services Danao, M., 2023, What is Customer lifetime Value (CLV), https://www.forbes.com/advisor/business/customer-lifetime-value/More Articles From Business Management
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