Customer Profitability Analysis

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INTRDUCTION

Customer profitability analysis is a comparison of the costs of all the activities used to support a customer or a customer group with the revenue generated by that customer or customer group. When we are using this analysis, profitability of particular customer or groups of customers can be determined and used for a range of strategic decisions. From that, firms can get benefits from knowing exactly who their best customers are and how much their contribution to firm profit. That’s mean firms can determine the profit contribution of customer segments and/or individual customers.

DIFFERENCES OF CUSTOMER

They are 4 type of customer. They are based on customization of product, marketing and selling activities, distributions channel, and customer support activities. The first one is based on customization of product. This is the type of customer that may require additional features to be added to products. For example, Pizza Hut actually have set a various type of pizza to be served, but not all will request for that type of pizza and some of the will request additional items to be added into the pizza for example adding more cheese or extra hot sauce in the pizza.

The second one is based on marketing and selling activities. The advertisements may be developed by the organizations to attract specific customer groups or industries. Some customer may purchase products online, while other customer may depend on calls from sales representatives. Customer that place frequent sales order will use more resources rather than those who place only occasional orders and they should be prioritize by the organizations. There are a lot of ways in order to market products such as advertisements on television, newspaper, radio, internet and website. Nowadays, social network also can be use to advertised and placed order to product. There are also another famous website such as eBay, Lelong.net.my and Mudah.com.my that were being used to market the...
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