ABSTRACT

Customer portfolio management (CPM) aims to optimize business performance – whether that means sales revenues, customer profitability, or something else – across the entire customer base. CPM practices in the business-to-business context are very different from those in the business-to-consumer context. CPM can make use of a discipline that is routinely employed by marketing management – market segmentation. Market segmentation is increasingly being transformed by information technology, particularly in consumer markets. Market segmentation based on recency of purchase, frequency of purchase and the money spent adds another level of insight. The attractiveness of a market segment is related to a number of issues including its size and growth potential, the number of competitors and the intensity of competition between them, the barriers to entry, and the propensity of customers to switch from their existing suppliers. Tesco, the largest supermarket chain in the UK, has developed a CRM strategy that is the envy of many of its competitors.