Customer Profitability Analysis: Reasons for Recent Popularity and Critical Infrastructures for Successful Implementation

Abstract

In these days which might be named as “Customer-focused world”, customer profitability analysis(hereafter CPA) has been regarded as one of hot rising topics in business world primarily thanks to the rapid improvements and wide adoption of information technologies such as ERP, DW, SCM etc. Although CPA was introduced quite early and emphasized (especially in the late 1990s) in the management accounting textbooks in relation with the extension of segment analysis, it was not until these days that the importance and usefulness of CPA has been brought to the front in real world. Most management accounting systems have focused on products, departments or geographic regions instead of defining customer as segment in the segment analysis. However, as marketing activities become more targeted to consumers through direct and interactive forms of communication, CPA takes on a critical role in marketing area. Considering this kind of trend, this paper deals with the nature of CPA and the reason for recent popularity tas well as major variables(in terms of infrastructures) which are necessary to ensure the effectiveness in real companies. Major critical infrastructures are listed as strategic management accounting systems which include ABC, value chain, strategic positioning as well as organizational culture which emphasizes information sharing empowerment among employees