The customer equity paradigm is readily implemented in
relationship businesses where the distinction between a
prospect and an existing customer is unambiguous. That
enables firms in such industries to be customer and
long-term focused in the allocation of their marketing
resources. This is not the case in frequently purchased
product categories, where customers may switch back and
forth between competing brands, and even consume
multiple brands in the same time period. However, by
adopting an always-a-share customer definition and using
a probabilistic classification of active and inactive
customers, we demonstrate that measures of customer
equity may still be obtained in such categories, using
readily available scanner panel data. We illustrate our
approach for the leading national and private-label
brands in two CPG categories and show that the brands’
sources of customer equity and the impact of their
marketing activities are very different. As a result,
the brands’ customer equity levels may be evolving in
different directions that are not readily apparent. We
discuss the managerial implications of our findings and
offer several areas for future research. pdf. 2008
