Customer Value Analysis in a Heterogeneous Market

Strategic Management Journal, Vol. 22, No. 9, pp. 845-857, 2001

Posted: 13 Jun 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Kamel Jedidi

Columbia Business School - Marketing

Indrajit Jay Sinha

Temple University - Department of Marketing and Supply Chain Management

Date Written: September 2001

Abstract

In recent years, customer value has become a major focus among strategy researchers and practitioners as an essential element of a firm's competitive strategy. Many firms have been interested in Customer Value Analysis (CVA) which involves a structural analysis of the antecedent factors of perceived value (i.e., perceived quality and perceived price) to assess their relative importance in the perceptions of their buyers. We develop a statistical approach for performing CVA utilizing a recursive simultaneous equation model that is formulated to accommodate buyer heterogeneity. In particular, the proposed finite-mixture methodology allows one to estimate the relative effects and integration rules of perceived value drivers at the market segment level, as well as to simultaneously determine the (unknown) segments themselves. We demonstrate the utility of the proposed methodology via an actual commercial application involving a large electric utility company. Finally, we discuss the contributions of our research from the perspective of firm strategy and how it may be extended in the future. Copyright © 2001 John Wiley & Sons, Ltd.

Keywords: customer value analysis, market segmentation, finite-mixture models, simultaneous recursive equations, customer value management

Suggested Citation

DeSarbo, Wayne S. and Jedidi, Kamel and Sinha, Indrajit Jay, Customer Value Analysis in a Heterogeneous Market (September 2001). Strategic Management Journal, Vol. 22, No. 9, pp. 845-857, 2001. Available at SSRN: https://ssrn.com/abstract=2792376

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Kamel Jedidi

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Indrajit Jay Sinha

Temple University - Department of Marketing and Supply Chain Management ( email )

Philadelphia, PA 19122
United States

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