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Myopic Management: A Case Study

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(Sunil Gupta V. Z., 2006) The authors outline both observable and unobservable customer metrics and empirically test the relationship between these metrics and a firm’s financial performance. From a customer’s perspective, the observable metrics are related to their behavior leading to the purchase and consumption of product or service. This, in turn, leads to firm`s decision about customer acquisition, retention and the CLV. The unobservable customer metrics include customer perception such as service quality, attitudes like customer satisfaction, intentions. Therefore, the unobservable metrics lead to observed behavior that could be assessed and then used to improve the financial performance of the company. The observable behavioral customer …show more content…

R., 2003) also presented the importance of the customers in valuing a company when traditional valuation approaches face difficulties. They discussed the customer lifetime value but in a relatively simple way with many assumptions for constant parameters over time. The authors also highlighted the fact that although customers are important intangible assets, customer lifetime value has a limited effect on the business. In the research, the use of CLV for managerial-decision making is presented. According to them, a key managerial decision is the one regarding the steps that should be taken in customer …show more content…

To begin with, a firm’s most direct way to communicate to their customers is through marketing actions. In today’s fast paced world, firms that are able to come up with a successful “fresh” marketing story could gain a competitive edge and increase their market share, namely enlarge their customer base. A large body of studies have documented and empirically analyze the importance and the relation between marketing effort and a firm’s financial performance. Srinivasan and Hanssen (Shuba Srinivasan, 2008) examined the impact of marketing actions on firm valuation. Thus, unexpected stock-return movement could be the results from marketing activity like changes in marketing strategy, new product introductions, advertising and other marketing

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