Customer Equity Issues - Coursework Example

It has three components namely value, brand and relationship equity. Value equity refers to customers’ company product assessment based on the offer, price and convenience. Mcdonald's is an example of a fast food company with a fair pricing policy, and this has raised customer equity and thus had a competitive advantage over the competitors in marketing.

The customer equity estimate from archived customer data enables managers to identify the financial impact of alternative marketing value drivers of the customer’s equity. The areas covered are brand advertising, quality or service improvements, and loyalty programs. Through computation, it is possible to determine the economic return for prospective marketing initiatives.

In addition, calculating the implementation cost and capital requirements involved gives the future financial return for any similar marketing initiative.

Estimation of each customer’s lifetime value rooted in the data about the frequency of their purchases in a category, the average quantity purchased and historical brand-switching patterns, combined with the business’s contribution margin. The necessary purchase data is obtainable from the business’s sales records while brand-switching patterns are estimates from either longitudinal panel data or survey data similar to those collected in customer satisfaction studies (Yu-Jia, 2011).

It is a term used for an aspect essential for a business or project to achieve its set goals and mission. It is a small number of elements that tend to detach the winners from the losers. It is critical to alter the marketing strategies due to the ever-changing markets to meet and satisfy the customer’s needs. An example is in the retailing industry, where location is a fundamental factor. The industry location should ease its access for the customers. In addition, good customer service is a basic element for a variety of business entities, since this is a key determinant for retaining customers (Erglis & Mickevica, 2011).

Well-defined goals are critical and fundamental factors towards the success of companies. People involved in the management of the companies have a role in setting and designing these goals that help to achieve success (McDonald & Keegan, 2002). Customers, on the other hand, have the role of gauging the best company based on all the critical success factors. To evaluate and determine the customer role, consider two businesses. The business incorporating all the critical success factors will register higher sales due to a greater influx of customers as compared to the one that does not apply the critical success factors.