The Integrated Analysis of Customer Value and Long-tail Theory-Take Amazon.com as an Example
Date Issued
2008
Date
2008
Author(s)
Chen, Ji-Yao
Abstract
The concept of segmentation is related to the CRM, relationship marketing, and customer value. Company has to be able to recognize which customer belongs to the “most valuable customer” group because of the limited available resource. Companies should find those high-valued customers’ preferences and try to satisfy their needs. Thus they can improve profit and get sustainable growth by maximizing customer lifetime value. nd with the emerging of “long-tail theory”, many companies start to supply as many kinds of products as they can to meet different needs of customers. Although the Pareto Principle is still true, companies are more willing to serve products even if they are not best seller because of the low cost and information accessibility of internet. Therefore, heterogeneity of customers becomes an important issue. For companies, only if they can find out the difference between different groups of customer, and understand their purchase interest and search behavior separately, they can make the right marketing decision. he thesis takes Amazon.com as an example to analyze with a focus on books category. We analyze the purchasing records in the database to see whether there is the difference between different customer groups, and whether the result will be affected by the type of books. We also know the search propensity of different groups of customer by analyzing their concentration ratio. So the analysis contains two dimensions at the same time, customer and product. From the empirical result, we find that high-valued customers have preference on so-called ”long-tail products”. Of course, low-valued customers prefer those “best sellers”. Besides, this situation will be sometimes different if we just focus on a certain type of book. The concentration degree of search behavior is also different between groups. For e-commerce companies like Amazon, the cross analysis above can help them execute relationship marketing better. According to the information, they also can come up with more effective marketing strategies and be more efficient on marketing resource allocation.
Subjects
customer lifetime value
long tail theory
concentration ratio
internet searching behavior
e-commerce
SDGs
Type
thesis
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