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Utilizing the access value of customers

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  • Lai, Puqing
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    Abstract

    Customers are critical resources for the success of any business, not only because they bring in sales and profits directly, but also because of their access value in a world that is becoming increasingly interconnected. However, the mechanisms by which the customer access value may be exploited and the implication for management has not been well understood. Access value can be defined as the worth of utilizing patrons for further marketing and sales of value-added or third party products. The access value, which mainly results from the aggregation of the customer base and customer data, is essentially a corporation's internalized asset. This article shows that the size of the customer base and the extent of engagement have a significant impact on the customer access value. To develop and gain the benefits of customer access value, traditional business models often need to be transformed: firms and platforms should provide free or subsidized products to attract people and then embed value-added products to make money. The success of the new business model depends on not only the right pricing and product strategies, but also an embedding strategy.

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    Bibliographic Info

    Article provided by Elsevier in its journal Business Horizons.

    Volume (Year): 57 (2014)
    Issue (Month): 1 ()
    Pages: 61-71

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    Handle: RePEc:eee:bushor:v:57:y:2014:i:1:p:61-71

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    Web page: http://www.elsevier.com/locate/bushor

    Related research

    Keywords: Customer value; Customer access; Customer data effect; Network externality; Envelopment attack; Embeddability; Business model;

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    1. Coase, R H, 1992. "The Institutional Structure of Production," American Economic Review, American Economic Association, vol. 82(4), pages 713-19, September.
    2. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
    3. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
    4. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
    5. Evans David S., 2008. "The Economics of the Online Advertising Industry," Review of Network Economics, De Gruyter, vol. 7(3), pages 1-33, September.
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    8. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-43, Summer.
    9. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
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