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Competition to Retain Customers

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Author Info

  • A. M. McGahan

    (Harvard Business School)

  • Pankaj Ghemawat

    (Harvard Business School)

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    Abstract

    This paper contains theoretical and empirical analysis of competition to retain customers. A formal game-theoretic model suggests that large firms are likely to exhibit greater customer retention rates than their smaller rivals in equilibrium even when their (common) customer retention technology does not exhibit increasing returns to scale. This hypothesis is corroborated by an empirical analysis of competition in ordinary life insurance.

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    File URL: http://dx.doi.org/10.1287/mksc.13.2.165
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    Bibliographic Info

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 13 (1994)
    Issue (Month): 2 ()
    Pages: 165-176

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    Handle: RePEc:inm:ormksc:v:13:y:1994:i:2:p:165-176

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    Related research

    Keywords: competitive strategy; defensive strategy; buyer behavior;

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    Cited by:
    1. Julian Villanueva & Pradeep Bhardwaj & Sridhar Balasubramanian & Yuxin Chen, 2007. "Customer relationship management in competitive environments: The positive implications of a short-term focus," Quantitative Marketing and Economics, Springer, vol. 5(2), pages 99-129, June.
    2. Li, Chu-Shiu & Lin, Chih Hao & Liu, Chwen-Chi & Woodside, Arch G., 2012. "Dynamic pricing in regulated automobile insurance markets with heterogeneous insurers: Strategies nice versus nasty for customers," Journal of Business Research, Elsevier, vol. 65(7), pages 968-976.
    3. Lu, Jye-Chyi & Tsao, Yu-Chung & Charoensiriwath, Chayakrit, 2011. "Competition under manufacturer service and retail price," Economic Modelling, Elsevier, vol. 28(3), pages 1256-1264, May.
    4. Bing Jing, 2007. "Product differentiation under imperfect information: When does offering a lower quality pay?," Quantitative Marketing and Economics, Springer, vol. 5(1), pages 35-61, March.
    5. Il-Horn Hann & Kai-Lung Hui & Sang-Yong Tom Lee & Ivan Png, 2005. "Consumer Privacy and Marketing Avoidance," Industrial Organization 0503009, EconWPA.
    6. Zhang, Wenqing & Li, Shanling & Zhang, Dan & Hou, Wenhua, 2014. "On the impact of advertising initiatives in supply chains," European Journal of Operational Research, Elsevier, vol. 234(1), pages 99-107.
    7. Villanueva, Julian & Bhardwaj, Pradeep & Chen, Yuxin & Balasubramanian, Sridhar, 2004. "Managing customer relationships: Should managers really focus on the long term?," IESE Research Papers D/560, IESE Business School.
    8. Gergely Biczók & Sándor Kardos & Tuan Trinh, 2010. "Pricing Internet access in the presence of user loyalty," Netnomics, Springer, vol. 11(2), pages 119-147, July.
    9. Il-Horn Hann & Kai-Lung Hui & Sang-Yong Tom Lee & Ivan P.L. Png, 2005. "Sales and Promotions: A More General Model," Industrial Organization 0508014, EconWPA.
    10. Chen, Yuxin & Zhang, Z. John, 2009. "Dynamic targeted pricing with strategic consumers," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 43-50, January.

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