Identifying a Firm's Most Profitable Customers As a successful pharmaceutical marketing manager, you have come to realize that not all of your customers are equally profitable, even if one generates more sales than others. Pharmaceutical manufacturers depend on physicians to prescribe their patented and branded drugs over competitive drugs. In one of your team's sales meetings, you suggested departing from industry practice, shifting toward viewing physicians as long-term strategic assets and, subsequently, targeting them based on potential profitability rather than current sales. In addition, you informed your team that by identifying the profitability of physicians, you will be able to not only segment profile, and target the most profitable group, but also understand their characteristics and offer them more attention. You concluded your presentation by acknowledging that adapting your firm's service to your customer's profitability level can increa your chances for success in the marketplace. Keeping in mind that your service can be customized to even higher profitability level you sort physicians into profitability classifications. Highly profitable physicians can be given VIP treatment and special attention, and customers of average profitability can be encouraged to generate higher profitability. Unprofitable customers can be nurtured and converted to better profitability classifications, while those contributing to losses can be dropped. Figure 1: Application of the Activity-Based Costing (ABC) Method to Customer Physicians sales of Prescription uPo-x Generated by a Particular Physician (Measured by IMS Health) Physician (A): $10,000 Physician (B): $14,000 Physician (C): $15,000 Physician (D): $18,000 k Prev1 of 1 Next Identifying a Firm's Most Profitable Customers As a successful pharmaceutical marketing manager, you have come to realize that not all of your customers are equally profitable, even if one generates more sales than others. Pharmaceutical manufacturers depend on physicians to prescribe their patented and branded drugs over competitive drugs. In one of your team's sales meetings, you suggested departing from industry practice, shifting toward viewing physicians as long-term strategic assets and, subsequently, targeting them based on potential profitability rather than current sales. In addition, you informed your team that by identifying the profitability of physicians, you will be able to not only segment profile, and target the most profitable group, but also understand their characteristics and offer them more attention. You concluded your presentation by acknowledging that adapting your firm's service to your customer's profitability level can increa your chances for success in the marketplace. Keeping in mind that your service can be customized to even higher profitability level you sort physicians into profitability classifications. Highly profitable physicians can be given VIP treatment and special attention, and customers of average profitability can be encouraged to generate higher profitability. Unprofitable customers can be nurtured and converted to better profitability classifications, while those contributing to losses can be dropped. Figure 1: Application of the Activity-Based Costing (ABC) Method to Customer Physicians sales of Prescription uPo-x Generated by a Particular Physician (Measured by IMS Health) Physician (A): $10,000 Physician (B): $14,000 Physician (C): $15,000 Physician (D): $18,000 k Prev1 of 1 Next