Customer value analysis in a heterogeneous market

Wayne S. Desarbo, Kamel Jedidi, Indrajit Sinha

Research output: Contribution to journalArticlepeer-review

192 Scopus citations


In recent years, customer value has become a major focus among strategy researchers 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 relative importance in the perceptions of their buyers. We develop a statistical approach for performing CVA utilizing a recursive simultaneous equation model that is formulated to accommodate buyer heterogeneity. In particular, the proposed finite-mixture methodology allows one to estimate the relative effects and integration rules of perceived value drivers at the market segment level, as well as to simultaneously determine the (unknown) segments themselves. We demonstrate the utility of the proposed methodology via an actual commercial application involving a large electric utility company. Finally, we discuss the contributions of our research from the perspective of firm strategy and how it may be extended in the future.

Original languageEnglish (US)
Pages (from-to)845-857
Number of pages13
JournalStrategic Management Journal
Issue number9
StatePublished - Sep 2001

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management


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