Customer value analysis in a heterogeneous market

Wayne Desarbo, Kamel Jedidi, Indrajit Sinha

Research output: Contribution to journalArticle

142 Citations (Scopus)

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.

Original languageEnglish (US)
Pages (from-to)846-857
Number of pages12
JournalStrategic Management Journal
Volume22
Issue number9
StatePublished - Sep 1 2001

Fingerprint

Customer value
Value analysis
Perceived value
Buyers
Methodology
Simultaneous equations model
Firm strategy
Market segments
Structural analysis
Finite mixture
Perceived price
Value drivers
Factors
Competitive strategy
Electric utilities
Relative importance
Perceived quality

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Cite this

Desarbo, W., Jedidi, K., & Sinha, I. (2001). Customer value analysis in a heterogeneous market. Strategic Management Journal, 22(9), 846-857.
Desarbo, Wayne ; Jedidi, Kamel ; Sinha, Indrajit. / Customer value analysis in a heterogeneous market. In: Strategic Management Journal. 2001 ; Vol. 22, No. 9. pp. 846-857.
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Desarbo, W, Jedidi, K & Sinha, I 2001, 'Customer value analysis in a heterogeneous market', Strategic Management Journal, vol. 22, no. 9, pp. 846-857.

Customer value analysis in a heterogeneous market. / Desarbo, Wayne; Jedidi, Kamel; Sinha, Indrajit.

In: Strategic Management Journal, Vol. 22, No. 9, 01.09.2001, p. 846-857.

Research output: Contribution to journalArticle

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Desarbo W, Jedidi K, Sinha I. Customer value analysis in a heterogeneous market. Strategic Management Journal. 2001 Sep 1;22(9):846-857.