2015 HSE & GAMMA Joint Symposium
SUSTAINABLE MARKETING AND CUSTOMER EQUITY
Yang Sun, Yonsei University, Republic of Korea1)
Eunju Ko, Yonsei University, Republic of Korea2)
Kyung Hoon Kim, Changwon National University, Republic of Korea3)
Tony C. Garrett, Korea University, Republic of Korea4)
ABSTRACT
Product and service are not the only way to win competitors in business. The company
should find better competitive advantages. How to seize present customers and explore
the potential customers become more important (Rust et al, 2004).
Sustainable development has been studied for many years. Corporate sustainability
management has been defined as profit-driven corporate primary with secondary
attention to environmental and social issues (Salzmann, Steger, & lonescu-Somers,
2005). From a more-focused business perspective, corporate sustainability can be defined
as a business approach that creates long-term shareholder value by embracing
opportunities and managing risks derived from economic, environmental, and social
developments. Firms’ marketing idea should be innovated with fast development of the
world. Marketing is not only to sale or introduce their product but also take care of the
environment and society (Elkington, J. et al., 1999). Marketers and marketing researchers
should shift marketing to sustainable marketing base on the hot issue of sustainable
development. Because sustainable marketing can increase firms’ profit and improve the
environment such as nature environment and society.
Customer equity, the sum of customer lifetime value, comes from value creation based on
profits, costs, cash flow, customers, and customer relationships. Customer equity emerges
when companies maintain customer relationships for a long time; that is, lifetime value
equals current value (Blattberg & Deighton, 1996). The concept focuses on maximizing
benefits in direct marketing and advancing marketing technology. Customer equity has
been defined as value of future profits that might be acquired from customers, excluding
corporate costs (Berger & Nasr, 1998), as profits created when companies allocate
resources appropriately to acquire and retain customers (Blattberg & Deighton, 1996),
and as the sum of all customers’ discounted lifetime value (Lemon et al., 2001). The
discounted lifetime value comprehensively expresses such concepts as acquisition and
retention of customers, profits, and costs. Earlier researchers mentioned the discounted
lifetime value from financial perspectives, and subsequent studies adopted the term. Rust
et al. (2004) defined customer equity as the total of the discounted lifetime values over all
current and potential customers.
In this research, we study the relationship between customer and sustainable marketing
performance. Customer equity has been the key for companies’ sustainable competitive
1)
ksmssun@gmail.com
ejko@yonsei.ac.kr
3) stride@changwon.ac.kr
4) tgarrett@korea.ac.kr
2)
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2015 HSE & GAMMA Joint Symposium
advantage. It is not only focus on product and service (value equity), but also concern
such as brand equity which is an intangible asset. Customer equity can estimate customer
lifetime value for the company (Rust et al, 2004). The firm can make proper marketing
strategy with customer equity. Customer equity can both satisfy consumers and make a
profit for the company (Lemon et al., 2001). This study wants to study the relationship
between sustainable marketing performance and customer equity.
Keywords: Sustainable marketing, Customer equity, Word of mouth, CLV, Customer
equity driver
Acknowledgments: This work was supports by the National Research Foundation of
Korea Grant funded by the Korean Government (NRF-2014S1A2A2028492).
References
Berger, P., & Nasr, N. (1998). Customer lifetime value: Marketing models and
applications. Journal of Interactive Marketing, 12(1), 17-30.
Blattberg, R., & Deighton, J. (1996). Manage marketing by the customer equity test.
Harvard Business Review, 74, 136-145.
Elkington, J. et al. (1999). Triple bottom line revolution: reporting for the third
millennium. Australian CPA, 69 (11), 75-79.
Lemon, K. N., Rust, R. T., and Zeithaml, V. A. (2001). What drives customer equity.
Marketing Management, 10(1), 20-25.
Rust, R. T., Lemon, K. N. & Zeithaml, V. A. (2004). Return on marketing: using customer
equity to focus marketing strategy. Journal of Marketing, 68, 109-127.
Salzmann O, Steger U, Lonescu-Somers, A. (2005). Quantifying economic effects of
corporate sustainability initiatives – Activities and drivers. IMD, 25, 3.
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