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Research Note: Customer Intimacy and Cross-Selling Strategy

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Author Info

  • M. Tolga Akçura

    ()
    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310)

  • Kannan Srinivasan

    ()
    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213-3890)

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    Abstract

    Better targeting opportunities and the increasing role of information-intensive environments have created new challenges for firms in obtaining customer information. Such information can help firms increase their profits through cross-selling opportunities. However, revealing personal preferences and contact information can raise the risks for customers when dealing with a firm. Consequently, some customers trade off the benefit and risks of revealing information. As the opportunity to obtain a higher level of information increases, customers incur a higher level of risk when dealing with a firm. This increases the firm's incentive to commit on a cross-selling level. By such a commitment, a firm can obtain customer intimacy and benefit from detailed customer information. As a result, profits increase while prices decrease. Thus, legal regulations that explicitly require firms to spell out the extent of cross-selling may actually improve the profits of the firm.

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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0390
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 51 (2005)
    Issue (Month): 6 (June)
    Pages: 1007-1012

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    Handle: RePEc:inm:ormnsc:v:51:y:2005:i:6:p:1007-1012

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    Related research

    Keywords: addressable marketing; customer relationship management; game theory;

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    Cited by:
    1. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, EconWPA, revised 29 Aug 2005.
    2. Bijmolt, Tammo H.A. & Blömeke, Eva & Clement, Michel, 2010. "Should they stay or should they go? Reactivation and Termination of Low-Tier Customers: Effects on Satisfaction, Word-of-Mouth, and Purchases," Research Report 10008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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