Methods of assessing customer equity: comparative analysis and applications by the example of FMCG-company
Student: Makarova Yana
Supervisor: Olga Konstantinovna Oyner
Faculty: Faculty of Management
Educational Programme: Master
Year of Graduation: 2014
<p align="right">Makarova Yana Viktorovna,</p><p align="right">Second-year student of Master program in Marketing of NRU HSE</p><p align="right"> </p><p align="right"> </p><p align="right">Scientific adviser:</p><p align="right">Doctor of Sciences, professor</p><p align="right">Oyner Olga Konstantinovna</p><p align="center"> </p><p align="center">Master’s thesis on the topic:</p><p align="center">“Methods of assessing customer equity: comparative analysis and applications by the example of FMCG-company”</p><p><strong>Introduction</strong></p><p>In today's highly competitive world marketing specialists are facing with the challenge of measuring marketing activities. The concept of customer lifetime value (CLV) directly connects marketing activities with financial performance. Kumar and Venkatesan<a href="#_ftn1" name="_ftnref1" title="">[1]</a> noted that CLV concept is a useful technique for predicting the future performance and perspectives of the company to maximize its profitability.<br /> </p><p><strong>Research goals and objectives</strong></p><p>The main purpose of the master's thesis is to conduct a comparative analysis of CLV models and to develop recommendations for collaboration with customers for FMCG-company based on their lifetime value.</p><p>The object of the thesis is CLV models and the subject of еру study – CLV models verification on Fast Moving Consumer Goods market (FMCG).<br />In accordance with the intended purpose research tasks were allocated:</p><p>1) to conduct a theoretical and methodological literature analysis that explores the concept of "customer equity" and approaches for assessing customer lifetime value;<br />2) to carry out a comparative analysis of CLV models based on FMCG-company data;<br />3) to identify the most important factors in predicting customer equity of FMCG-company;<br />4) to determine a customer lifetime value model that most accurately estimates customer equity of FMCG-company;</p><p>5) to provide recommendations on cooperation with various customer segments based on their lifetime value and the results of the study.<br /> </p><p><strong>Methodology</strong></p><p>To accomplish the purpose of the study the following methods were used:<br />1) to conduct a desk research of previous Russian and foreign studies on the customer equity concept;<br />2) to carry out a desk research on the internal data of FMCG-company in order to create a database of ice-cream sales for key accounts;<br />3) to make a quantitative analysis of the database using cluster, network and ABC analysis.<br /> </p><p><strong>Findings and conclusion</strong></p><p>In this paper three customer lifetime value models were appraised at key customers of FMCG-company, operating in the ice-cream market in Moscow. According to the research results it was found that Gupta, Lehmann, Stuart<a href="#_ftn2" name="_ftnref2" title="">[2]</a> CLV-model most accurately estimates customer lifetime value. Thus, it is applicable for customer lifetime value estimation for examined FMCG-company. It was revealed that for a more accurate assessment of the customer equity of the company Gupta, Lehmann, Stuart CLV-model can be supplemented by a seasonality factor.</p><p>As a result of cluster analysis, key customers were divided into three clusters: "less profitable customers", "profitable customers" and "highly profitable customers". Within clusters sales structure by brands was considered and the following interdependence was found: the more profitable customer, the higher the share of sales of high-margin brands and the lower share of sales of medium- and low-margin brands. Within the framework of network analysis the interconnection of most profitable and most unprofitable brands has been defined. With the help of ABC-analysis (on customer profitability), the most profitable customers were revealed.</p><p>Based on the research results recommendations on collaboration with key customers (Moscow) for FMCG-company were developed.</p><div><br clear="all" /><hr align="left" size="1" width="33%" /><div id="ftn1"><p><a href="#_ftnref1" name="_ftn1" title="">[1]</a> Venkatesan R., Kumar V. A. Customer Lifetime Value Framework For Customer Selection and Resource Allocation Strategy // Journal of Marketing, Vol. 68, No.4, 2004, pp. 106 – 125.</p></div><div id="ftn2"><p><a href="#_ftnref2" name="_ftn2" title="">[2]</a> Gupta, S., Lehmann D. R., Stuart J. A. Valuing customers // Journal of Marketing Research, 2002, pp. 7–18.</p></div></div><p> </p>
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