Question 1( 30 marks)

1. There appears to be a growing tendency for companies to seek competitive advantage by applying customer focused strategies. This customer focus is evident from a number of companies including customer orientation in their corporate mission statement.

1-Explain the concept of customer profitability analysis. Give examples of cost drivers used in this analysis

2-How does the life time analysis differ from the basic customer profitability approach? Explain

3-Show reasons why might an organization choose to keep an apparently unprofitable customer.

4- Should the company in its customer profitability analysis use activity based costing approach or traditional product and service costing approaches. Explain the reason behind your answer.