Customer Relationship Marketing by Prof. J. Lim 1

Individual Assignment 2 Scenario: Best Buy

As a team leader of a consulting company, John Landers is in deep thought wondering how to

develop a presentation to the client firm, the Best Buy next month. (Please read the Case 4-1: Best Buy

of the textbook). Last few years, market condition deteriorated dramatically with increased online

competition and reduced customer spending. The tough business conditions and slow economic

recovery drive many corporations into more intense customer relationship marketing programs. In

addition, increased use of online and mobile shopping and e-purchase can threaten the growth and

survival of the physical retail chains. John needs to collect any relevant information and document all

these new developments in his report. Based on the assessment, John should develop alternative value

based market segments, segment profiling, and relationship marketing options for the client firm.

In his presentation, John thinks that he needs to perform the client firm’s life time value analysis and

customer portfolio analysis. John believes that he needs to answer the following questions for his client

firm.

1. What specific factors should Best Buy include in calculating its customers’ lifetime value?

Calculate the lifetime value of typical customers and identify value based segments for Best Buy.

Choose 2-3 value based segments and describe their typical customer profiles.

2. What is the impact of Best Buy’s new customer strategy on its customer portfolio? What

recommendations would you offer to Best Buy in managing its customer portfolio?

• Write a 2-3 page report. Please refer to the ‘relationship marketing templates’ including the excel

table in the textbook. Make any needed assumptions and use your best estimates in calculating

the lifetime value. You may include the excel table as an appendix in your report.