THE ROLE OF COMPETITION IN CUSTOMER EQUITY MANAGEMENT
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Customer management based on Customer lifetime value has emerged as the most effective way of doing business due to the ability to foster profitable CRM (Verhoef & Lemon, 2013; Villanueva & Hanssens, 2007). Although there has been much conceptual evidence of the positive link between customer equity and firm’s performance(Blattberg, Malthouse, and Neslin 2009), comparison of relationships between two competing firms based on customer equity and firm profitability is limited. Therefore, this research examines the role of customer equity on the firm profitability by comparing the company type such as leader and follower in customer equity setting. The result shows that the effect of newly acquired Customer equity of the second tier company is stronger than that of the top tier company while the effect of retained customer equity of the top company is stronger than that of the second tier company. Overall, the results provide strategic implications for firms to use a different customer equity strategy in a competitive market structure.