Customer portfolio models

The so-called customer portfolio models or matrices (CPM) are targeted at... 

Portfolio models are a very common tool in customer segmentation. The applied parameters for this type of segmentation can be purely qualitative, but also mixed combinations or purely quantitative dimensions are possible (see customer value matrix in Marcus 1998). 

Summarizing, it can be said that using portfolio models for qualitative customer segmentation offers an effective and rather simple way of evaluating the allocation of resources to specific customers (Terho and Halinen 2007). Moreover, it is also an appropriate option to combine qualitative and quantitative dimensions, for instance, by considering customer lifetime value (CLV) (Campbell and Cunningham 1983). 

However, the simplicity of the concepts also bears potential for critique. It is claimed that portfolio models serve only for visualization, but not for an analytical and prescriptive treatment of the data (Yorke and Droussiotis 1994). Moreover, practically speaking, this type of business analysis is relatively rarely performed for grouping customers into segments. Furthermore, the simplification of complex systems excludes crucial influencing factors, such as network effects (i.e., the linking up of business participants) (Yorke and Droussiotis 1994 Terho and Halinen 2007). 

Currently, specialty chemical players too are benefiting from better industry conditions, significant cost improvement efforts by many players, and a very cautious stance on investments and acquisitions over the last few years. However, we predict that the pre-1997 glory days will never return. Rapid commoditization of parts of the portfolio and relentless price pressure will continue to endanger business models. For some players, a rigorous focus on cost will be the path to success, others - and these businesses will still earn a substantial premium on industry average profitability - will develop true customer solutions. 

Figure 17.13 depicts this case study. The manufacturer and the customer compute optimal configurations based on the same product model. For the customer, a subset of the available configurations is defined. For example, this defines the market offers of the manufacturer. Instead of having different representations of the product portfolio, we show in this case study that manufactures as well as customers can perform their processes on the same product model. 

In the field of power capacitors the company claims that its portfolio is number one worldwide with its rugged range of aluminium models able to withstand the high ambient temperatures of car engine compartments. Epcos also makes film capacitors, where the plastic film may be up to ten times thinner than a human hair, and ultracapacitors. The capacitor division also supplies power factor correction modules as a cost saving service to customers. 

To support product portfolio and multisite capacity planning under uncertainty for pharmaceutical plants Levis and Papageorgiou (2004) develop a two-stage stochastic MILP. The authors consider clinical trials outcomes and the customer demand as uncertain parameters. An MILP model that evaluates the profitability of introducing new active ingredients into the product pipeline for multiple parallel production lines in campaign mode is presented by Sundaramoorthy and Karimi (2004). 

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