Customer lifetime value has been a mainstay concept in direct response Department at the School of marketing for many years, and has been increasingly considered in the Management, Boston University. field of general marketing. However, the vast majority of literature on the topic (a) has been dedicated to extolling its use as a decisionmaking criterion; (b) has presented isolated numerical examples of its calculation/determination; and (c) has considered it as part of the general discussions of profitability and discussed its role in customer acquisition decisions and customer acquisition/retention trade-offs. There has been a dearth of general modeling of the topic. This paper presents a series of mathematical models for determination of customer lifetime value. The choice of the models is based on a systematic theoretical taxonomy and on assumptions grounded in customer behavior. In NADA I. NASR is a doctoral student in Marketing at the School addition, selected managerial applications of these general models of of Management, Boston University. customer lifetime value are offered.
This article discusses how parameters of a cooperative advertising arrangement are currently decided upon and presents decision models which demonstrate that quantitative analysis can lead to a better decision when profits are to be maximized. A real-world application of the methodology is presented.
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