Customer acquisition

Therefore, the biggest challenge for ChemKit in the initial stages will be to win suitable reference customers in order to become established in the market. However, as soon as ChemKit has secured a foothold, there is nothing in the way of rapid customer acquisition, as only four consultancies service approximately 4,000 potential customers in the Austrian market. 

Supplier selection Work scheduling Customer acquisition Machine care... 

Business benefit the gains in revenue from increased sales, customer acquisition, or increased customer retention. 

To gain an edge over competitors in an increasingly global and competitive marketplace, companies today need to differentiate themselves not only in cost, but in the overall value of the products and the services they offer. As customers demand more and more variety of products, better, cheaper, and faster, an essential value feature for customer acquisition and retention is the ability to quote short and reliable lead times. Reliability is important for customers especially in a business-to-business setting, because it allows them to plan their own operations with more reliability and confidence [67]. 

D (A ) demand (random variable), parameterized by the customer acquisition spending,... 

Assumption 2. Expected demand is increasing in customer acquisition spending and it is always profitable to spend a non-zero amount on customer acquisition ... 

The wholesaler buys the product at a fixed unit cost c and sells it to the retailer at a fixed unit wholesale price w. The retailer holds inventory and sells it to the customers at a fixed unit price r. The retailer here is the sole decision maker who decides on both the stocking quantity and the customer acquisition spending. Similar to model /,... 

Note that although in this model the retailer is the sole decision maker and therefore seems to possess some power in the chain, he also bears all the inventory-related risk. In addition, customer acquisition spending incurred by the retailer not only benefits him but also benefits the wholesaler. As we will demonstrate later, this leads to the suboptimal performance of the channel. 

We see that the stocking quantity of the wholesaler is increasing in the customer acquisition spending by the retailer. This time we can also establish the sign of the second derivative... 

Suppose now that the retailer acts as a Stackelberg leader and offers the wholesaler a take-it-or-leave-it contract that specifies an amount of money the retailer is willing to spend on customer acquisition. 

Observation 1. Denote by r) A) the elasticity of expected demand w.r.t customer acquisition spending. Formally ... 

Then the optimality condition that defines customer acquisition for all Models can be re-written as follows ... 

Each optimality condition is interpreted as follows the ratio of the total customer acquisition spending to the total expected revenue (right-hand side) is equal to the demand elasticity times the retailer s relative marginal profit (left-hand side which is revenue minus marginal cost divided by the revenue). 

Observation 2. In all models, customer acquisition spending and stocking quantity are strategic complements. 

From part a) of Proposition 6, we see that vertical disintegration leads to underspending on customer acquisition by the retailer, and in drop-shipping models the retailer imderspends more than in the traditional model due to the misalignment of marketing and operations functions. It is interesting to note that... 

Not only are the price-only contracts inefficient, but also none of the other currently known contracts can coordinate the supply chain when customer acquisition expenses are considered. 

Proposition 7. The following contract achieves supply chain coordination in Model T the wholesaler sponsors a portion of the retailer s customer acquisition expenses a = w — c)/ r c),and at the same time offers the retailer a compensation 6 = a (r (1 — / ) -f- ft) for each unit of inventory carried... 

Supply Chain Structures on the Internet customer acquisition expenses. 

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