Customer Loyalty and Supplier Strategies for Quality Competition
AbstractWe analyze a model of consumer response to variation in product or service quality. The model, developed in , provides closed-form expressions that characterize short-term and long-term measures of customer loyalty to a supplier. In this paper, we develop sensitivity analyses that offer a rich characterization of how factors - such as the underlying quality levels of the suppliers, the customer's ability to distinguish between good and bad suppliers, and the customer's prior beliefs regarding the suppliers affect both short-term and long-term loyalty. We also use the expressions to develop simple normative models for suppliers that wish to develop effective quality strategies.
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Bibliographic InfoPaper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 99-12.
Date of creation: Jan 1999
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- Dana, James D, Jr, 2001.
"Competition in Price and Availability When Availability is Unobservable,"
RAND Journal of Economics,
The RAND Corporation, vol. 32(3), pages 497-513, Autumn.
- James D. Dana, 2000. "Competition in Price and Availability when Availability is Unobservable," Econometric Society World Congress 2000 Contributed Papers 1450, Econometric Society.
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