Question

Your firms (one in Georgia, Michigan, and California) have conducted research and found that on average, Hispanic customers purchase more per week and have higher profit than the average customer. If the Hispanic population is growing at rates of 96.15% in Georgia, 34.73% in Michigan, and 27.79% in California, what are the possible impacts of these changes on your firm’s customer equity?

Answer 1

The firms in all the countries mentioned above will be willing to sell their product to Hispanic customers as their purchase more and this also leads to higher profit margins for the firms. If the Hispanic population is growing at the rate of 96.15 per cent in Georgia, then the firm will be selling more and more amount of the good to the Hispanic customers and this will reduce customer equity in Georgia by the largest amount because population of Hispanic customers is growing at the largest rate in Georgia. On the other hand, in countries such as Michigan and California, customer equity will fall because of the rise in the population of Hispanic customers which is the targeted group of customers. Thus, it can be stated that the customer equity will fall by the largest amount in Georgia.