Customer segmentation model based on value generation for marketing strategies formulation

When deciding in which segment to invest or how to distribute the marketing budget, managers generally take risks in making decisions without considering the real impact every client or segment has over organizational profits. In this paper, a segmentation framework is proposed that considers, firstly, the calculation of customer lifetime value, the current value, and client loyalty, and then the building of client segments by self-organized maps. The effectiveness of the proposed method is demonstrated with an empirical study in a cane sugar mill where a total of 9 segments of interest were identified for decision making.