A customer whose pricing and cost-to-serve characteristics allow the company to realize a positive cash flow, but a negative return on net capital employed, on the sales made to the customer through the business cycle.
(See also Core, Near-core)
Hertz has had to close some offices. Problems in the oil-country markets emerged in January 1986 and led to the closing of sites in Shreveport, Tulsa and Arlington.
(Year 1987-SIC 7353)
Explanation: Lay-offs in these geographic areas have reduced demand for the Hertz product to such a degree that the geographic area becomes a Non-Core Customer location. Hertz, therefore, withdraws as it fails to generate cash at the site.
ProSource, Inc. pruned its less profitable accounts that had a positive effect on operating profits. The company reduced variable costs and freed up additional capacity that could accommodate the growth of higher-margined accounts. That program eliminated 604 restaurants and $74 million of 1995's revenues from the customer base.
(Year 1997-SIC 5141)
Explanation: ProSource eliminated 604 Non-core restaurant customers in order to improve its profits and return on investment.
Home Depot will begin testing its Villager's Hardware concept with four stores in New Jersey. The stores will be only one-third the size of its warehouse-style Home Depots and will carry mostly merchandise for small home projects.
(Year 1998-SIC 5211)
Explanation: Home Depot viewed smaller localities as Non-Core Customers. These geographic areas were too small to support a regular Home Depot store. However, in order to serve these Non-Core Customers, the company invented a new concept, better suited to their needs and the company's cost structure.
Thanks to the elimination of three unprofitable hard goods lines — home electronics, sporting goods and photography – gross margins have climbed steadily at J.C. Penney.
(Year 1989-SIC 5311)
Explanation: The customers who purchased home electronics, sporting goods and photography were Non-Core Customers for JC Penny.
Banks are trying to discourage low-balance customers by charging these customers fees that inhibit access to services.
(Year 1987-SIC 6021)
Explanation: Low balance Customers are Non-Core Customers for these banks. They will not support an acceptable return on investment.