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Customer Lifetime Value and Company Lifespan Essay

One of the most critical objectives in marketing is developing insights regarding customers. Often, perspective for this concern has only highlighted how consumers can be attracted or how to extend customer base. However, Lal and Weber (2000) also point out the need to evaluate the characteristics of consumers and how they influence and impact sales and marketing models. They used the example of Freeport Studios, the catalogue sales program targeting to service women’s clothing of outdoor equipment retail and catalogue leader L. L.

Bean launched in the late 1990’s. Segmentation and Freeport Studios Segmentation implies the division of whole into a separate and distinct unit. In the context business, particularly marketing, there is implication that segmentation creates a distinction but should not be considered as equitable to independence. Thus, there is a need to identify the characteristics of the segment targeted or being evaluated. There are also suggestions that segmentation should be able to determination of the value and function of the segment on the whole.

The name of the new catalogues reflects these objectives, “Freeport” is a nod to their parent company’s flagship store and “Studios” was to signify the stylishness and flair of the products in the catalogue. The catalogue

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in itself was distinct to L. L. Beans in that there was a greater recognition of the psychographics of the target market, drifting from the traditional emphasis on function and value. In the case of Freeport Studios, the catalogue was designed to address a specific demographic of L. L. Bean: women in their twenties and thirties who had active lifestyles who have a history or consciousness of L. L.

Bean who has an appreciation for fashion and design were the main target market. This market segment is to be addressed specifically by Freeport Studios catalogue without excluding them from other L. L. Bean catalogues. At the same time, it was aimed to strengthen the core products of L. L. Bean catalogues wherein sales for the target had since hit a plateau. Customer Lifetime Value and Company Lifespan Also referred to as Lifetime Value (LTV), Customer Lifetime Value (CLV), is a marketing concept developed from customer life cycle management perspectives.

CLV is calculated by determining the prevent value of cash generated from the patronage of the client based on the customer life cycle, providing an cash or quantifiable value of the relationship that is to exist between the client and the company . The evaluation is often used to determine whether short loss from operations or transactions can be justified by long-term values. As seen in the computation for CLV, the values calculated from sales is below the targets determined by the company, particularly in the case of total revenue expectations.

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