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Achieving the full profit potential of each customer relationship should be the fundamental goal of every business. The logic is as simple as it is compelling: Profits from customer relationships are the lifeblood of all businesses. And, at the most basic level, these profits can be increased in only three ways: by acquiring new customers, by enhancing the profitability of existing customers, and by extending the duration of customer relationships. Yet the business models that drive decisions in most large companies were forged before it was possible to focus directly on these key drivers of business profitability. Today companies can use information and technology tools to link their investments in customer relationships to the returns that customers generate. In other words, companies can now optimize what the authors call the value exchange: the relationship between a company's financial investment in customer relationships and the return that customers generate in responding to that investment.

Spreadsheet supplement for case 596-036.

Students are instructed to interview a recent purchaser of a low-involvement product or service in depth about his/her buying decision. The exercise provides students with first-hand understanding of important concepts in consumer choice domain (e.g., stages in the buying process, decision-making roles, habit versus deliberation).

Students are instructed to interview a recent purchaser of a high-involvement/utilitarian product or service in depth about his/her buying decision. The exercise provides students with first-hand understanding of important concepts in consumer choice domain (e.g., stages in the buying process, decision-making roles, habit versus deliberation).

Students are instructed to interview a recent purchaser of a high-involvement/ego-expressive product or service in depth about his/her buying decision. The exercise provides students with first-hand understanding of important concepts in consumer choice domain (e.g., stages in the buying process, decision-making roles, habit versus deliberation).

Students are instructed to interview a recent purchaser of a low-involvement product or service in depth about his/her ownership and usage experiences. The exercise provides students with first-hand understanding of important concepts in consumption domain (e.g., customer satisfaction, product meaning, brand loyalty).

Students are instructed to interview a recent purchaser of a high-involvement product or service in depth about his/her ownership and usage experiences. The exercise provides students with first-hand understanding of important concepts in consumption domain (e.g., customer satisfaction, product meaning, brand loyalty).

Students are instructed to interview a recent purchaser of a high-involvement/ego-expressive product or service in depth about his/her ownership and usage experiences. The exercise provides students with first-hand understanding of important concepts in consumption domain (e.g., customer satisfaction, product meaning, brand loyalty).

Highlights the decision that must be made on balancing customer acquisition and retention and de-emphasizing the structural issues involved in administering the independent contractor sales force.

It's no secret that managing a brand in today's chaotic marketplace is a daunting task. Consumers are bombarded with messages from broadcast and narrow-cast television, radio, on-line computer networks, the Internet, faxes, telemarketing, and niche magazines. But by harnessing new and emerging technologies, companies can start real-time dialogues with their customers and provide interactive services with valuable side effects. Netherlands-based Philips NV, for example, used a research team to brainstorm with children and adults to develop a new product; in the end, its enthusiastic young product developers became potential loyal customers. Marketing managers must take responsibility for systems that link companies with customers, suppliers, and distributors. They must give consumers access and learn to think of feedback as part of product development. They need to provide customers with support and information. Finally, they need to become personally competent in information technology and to expand the role of marketing within the organization.

Category management is a technique used by retailers where the product assortment is sub-divided into categories that 1) reflect the purchasing behaviour of the target consumers and 2) are managed as separate business units. In category management, retailers aim to improve the overall performance of a group of products, rather than focus on individual items. In other words, it is a change in perspective about the competitive dynamics of products in the assortment. Individual categories have a manager with the responsibility for making both the buying and merchandising decisions for the category and for planning and achieving the sales and profit goals. (A color version of this case is available at a higher price.)

Lexus executives and dealers in the United States are debating how to respond to the U.S. Trade Representative's announcement of 100% tariffs on 13 models of Japanese luxury imported cars.

Spreadsheet supplement for case 596112.

In early 1994, Kimberly-Clark agreed to manufacture private-label training pants for Wal-Mart under the "Atta-Boy!" and "Atta-Girl!" labels. To place this decision in perspective, the case describes Procter & Gamble's battle with Kimberly-Clark for market share in the disposable-diaper market. The case also describes Procter & Gamble's adoption of value pricing, as well as Wal-Mart's introduction of premium store brands. Students must use this information to answer three questions: (1) How should Procter & Gamble respond to the introduction of Huggies Supreme with Velcro fasteners? (2) What should Procter & Gamble do with Luvs disposable diapers, which had been repositioned against private labels with a 16% price cut in May 1993? (3) How should Procter & Gamble respond to Wal-Mart's decision to sell private-label diapers manufactured by Kimberly-Clark?

The management team at Electrohome's projection systems division must decide what to do in response to a surprise new product introduction by Sony Projection Systems. The new product threatens Electrohome's position at the high end of the market. The case focuses on competitive analysis as three players from three different regions of the world vie for profitable positions in the industrial projection system market. This case presents Electrohome's perspective of the same event documented in the Barco Projection Systems (A) case (HBS 9-591-133). Two follow-up cases Electrohome (B): The Phoenix Project and Electrohome (C): The Marquee Launch are available.

This case follows Electrohome (A): Projection Systems Division, and discusses the key events that have taken place among the competitors since the (A) case date. Electrohome is developing a new projection system which has the potential to be the best projector on the market. Of key importance is an understanding of the likely actions and reactions of the major competitors in the market. If the Phoenix project fails, Electrohome will likely go bankrupt.

This case follows Electrohome (A): Projection Systems Division, and Electrohome (B): The Phoenix Project. The Phoenix project is on track for completion before a critical trade show in January 1993. It is now August and the management team must decide whether or not to pre-announce the product or delay the announcement for maximum impact and surprise.

This is the second case in a two-part case series about decisions relating to the introduction of a new product, Johnson's face powder, to the Philippines market. In the first case, J & J (Philippines), Inc. - Johnson's Face Powder (A), the student was asked to assess the merit of the strategy, both in terms of market acceptance and their calculations as to projected contribution. In this case, the marketing vice president of J&J (Philippines) gets a phone call from the U.S. headquarters telling him to cancel the introduction. The subsequent discussion focuses on the issue of how product policy should be managed in an international organization. (A two-minute video can be purchased for this case, J & J (Philippines) Inc. - Johnson's Face Powder - Video.)

North Pittsburgh Telephone Company (NPT) was the 31st largest telephone company in the United States. The marketing supervisor was wondering what position to take at the next management committee meeting regarding the possible introduction of usage sensitive pricing for NPT's new advanced custom calling services. He was responsible for marketing all NPT's network services. NPT was introducing the new services the following year on a subscription pricing basis, but there was some management support for offering usage sensitive pricing for the features as well. The next meeting would be critical in determining whether to offer usage sensitive pricing and if so, how.

Although reviled in the business press as short-term fads, rewards programs are gaining popularity. Rewards can and do build customer loyalty. Unfortunately, they are widely misunderstood and often misapplied. A rewards program needs to share value in proportion to the value the customer loyalty creates for the company. A company must first make sure that its rewards align with company capabilities, then take into account the five elements that determine value to a customer: cash value, choice, aspirational value, relevance, and convenience. Any company can attain access to the full set of capabilities. Some businesses choose to band together with others in a rewards network. The authors detail the ways American Express, General Motors, State Farm, Neiman Marcus, Saks Fifth Avenue, MCI, Air Miles, and others are building customer loyalty.