Question

1) What causes a product or customer to be highly unprofitable?

2) When would a product or customer be highly profitable?

3) Are there any examples of unprofitable customers in the financial investment or brokerage organisations?

Answer 1

1) Every product has it's stages from booming demand to the declining demand in it's lifecycle. Also competitor's product in the market which has to be considered here. Lower demand, decline in the customer's need for the product, or technology advancement could take away the product's influence. The same can be cannibalized in the market proving unprofitable.

A customer who doesn't make use of the product or opts for the substitute or an alternative can be proved as highly unprofitable. For an instance, a person may have a mobile network connection although he may not use the calls and use internet calls could be categorized as an unprofitable customer.

2) A product which is high in demand, and frequently a need which resource is scarce in the economy can be highly demanding. A customer who relies on medication for his cure of illness could be highly profitable since his medicine is a compulsory need.

3) There are examples of unprofitable customers in the brokerage or in the financial investments, such as investors who aren't interested to make an investment plan where their funds will be lying without any fund appreciation, also whoever are in hold of a fear to lose their money. They could be a burden to maintain and also at the same time the commission or brokerage could become a loss in case of passive investors. These passive investors could become unprofitable customers.