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Survey Evidence on Customer Markets

Author

Listed:
  • Ali Choudhary
  • Thorlakur Karlsson
  • Gylfi Zoega

    (Department of Economics, Mathematics & Statistics, Birkbeck)

Abstract

This paper uses survey data from Iceland on 884 firms to test for the theory of customer markets proposed by Phelps and Winter (1970) and Okun (1981). The results provide support for the customer market theory in that managers agree that customers are valuable to firms – they rank them second only to employees – and they use various means of augmenting and retaining their customer base, such as advertising. Surprisingly, however, price setting appears not to be an important ploy for attracting and retaining customers. In this we confirm the earlier results of Lye and Sibly (1994) using Australian data. Instead, advertising and direct contact with customers are listed as significantly more important.

Suggested Citation

  • Ali Choudhary & Thorlakur Karlsson & Gylfi Zoega, 2009. "Survey Evidence on Customer Markets," Birkbeck Working Papers in Economics and Finance 0916, Birkbeck, Department of Economics, Mathematics & Statistics.
    • Handle: RePEc:bbk:bbkefp:0916
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    Cited by:

    1. Paul Middleditch, 2010. "A New Keynesian Model with Heterogeneous Price Setting," Centre for Growth and Business Cycle Research Discussion Paper Series 150, Economics, The University of Manchester.
    2. Thorvardur Tjörvi Ólafsson & Ásgerdur Pétursdóttir & Karen Á. Vignisdóttir, 2011. "Price setting in turbulent times," Economics wp54, Department of Economics, Central bank of Iceland.
    3. Thorvardur Tjörvi Ólafsson & Ásgerdur Pétursdóttir & Karen Á. Vignisdóttir, "undated". "Price setting in turbulent times. Survey evidence from Icelandic firms," Economics Working Papers 2011-09, Department of Economics and Business Economics, Aarhus University.

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