Budget allocation to grow market share and maximize customer equity: The effect of inertial segment size

Hsiu-Yuan Tsao, Colin Campbell, Junzhao Ma, Leyland Pitt

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This article builds on the original Blattberg–Deighton (BD) model of customer
equity to focus on short-term market share growth and long-term customer equity. We account for what we term the inertial segment – those consumers who will continue to purchase in the absence of retention spending – to explore ways to more optimally balance budget allocation between customer acquisition and retention. We demonstrate that previous focus on budget allocation with the single marketing objective of maximizing customer equity neglects the relevance of investment in acquisition. Our proposed model boosts customer equity and is achieved with a lower total budget.
Original languageEnglish
Pages (from-to)205-217
Number of pages13
JournalJournal of Marketing Analytics
Volume2
Issue number4
DOIs
Publication statusPublished - 2014

Keywords

  • budget allocation
  • inertial segment
  • customer equity
  • market share growth
  • customer retention and acquisition

Cite this

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Budget allocation to grow market share and maximize customer equity : The effect of inertial segment size. / Tsao, Hsiu-Yuan; Campbell, Colin; Ma, Junzhao; Pitt, Leyland .

In: Journal of Marketing Analytics, Vol. 2, No. 4, 2014, p. 205-217.

Research output: Contribution to journalArticleResearchpeer-review

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