Customer value analysis in a heterogeneous market

In recent years, customer value has become a major focus among strategy res earchers 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 relati ve importance in the perceptions of their buyers. We develop a statistical approach for performing CVA utilizing a recursive simultaneous equation mod el that is formulated to accommodate buyer heterogeneity. In particular, th e proposed finite-mixture methodology allows one to estimate the relative e ffects and integration rules of perceived value drivers at the market segme nt level, as well as to simultaneously determine the (unknown) segments the mselves. We demonstrate the utility of the proposed methodology via an actu al commercial application involving a large electric utility company. Final ly, we discuss the contributions of our research from the perspective of fi rm strategy and how it may be extended in the future. Copyright (C) 2001 Jo hn Wiley & Sons, Ltd.