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Customer retention and price matching: The AFPs case

  • Hidalgo, Pedro
  • Manzur, Enrique
  • Olavarrieta, Sergio
  • Fari­as, Pablo

Understanding the long-term price matching effects on CLV is important in evaluating the effectiveness of these policies in stimulating customer retention. In industries with low brand differentiation and low customer involvement (e.g., private pension system), it can be seen that choosing a brand is based on inertia. The objective of this article is to analyze the convenience for the firm of improving customer retention, by matching the lowest price in the Chilean private pension system. Results suggest that matching the industry's price leader reduces the firm's CLV, thus diminishing firm incentives to make this marketing effort.

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Article provided by Elsevier in its journal Journal of Business Research.

Volume (Year): 61 (2008)
Issue (Month): 6 (June)
Pages: 691-696

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Handle: RePEc:eee:jbrese:v:61:y:2008:i:6:p:691-696
Contact details of provider: Web page: http://www.elsevier.com/locate/jbusres

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  1. Peter Diamond, 2005. "Reforming public pensions in the US and the UK," LSE Research Online Documents on Economics 24662, London School of Economics and Political Science, LSE Library.
  2. Gountas, Sandra & Ewing, Michael T. & Gountas, John I., 2007. "Testing airline passengers' responses to flight attendants' expressive displays: The effects of positive affect," Journal of Business Research, Elsevier, vol. 60(1), pages 81-83, January.
  3. Mano, Haim & Oliver, Richard L, 1993. " Assessing the Dimensionality and Structure of the Consumption Experience: Evaluation, Feeling, and Satisfaction," Journal of Consumer Research, University of Chicago Press, vol. 20(3), pages 451-66, December.
  4. Kukar-Kinney, Monika, 2006. "The role of price-matching characteristics in influencing store loyalty," Journal of Business Research, Elsevier, vol. 59(4), pages 475-482, April.
  5. Solange Berstein & José Luis Ruiz V, 2005. "Sensibilidad de la Demanda con Consumidores Desinformados: El Caso de las AFP en Chile," Working Papers 4, Superintendencia de Pensiones, revised Apr 2005.
  6. Srivastava, Joydeep & Lurie, Nicholas, 2001. " A Consumer Perspective on Price-Matching Refund Policies: Effect on Price Perceptions and Search Behavior," Journal of Consumer Research, University of Chicago Press, vol. 28(2), pages 296-307, September.
  7. Martin Feldstein, 1980. "Do Private Pensions Increase National Saving?," NBER Working Papers 0186, National Bureau of Economic Research, Inc.
  8. Pitelis, Christos N, 1985. "The Effects of Life Assurance and Pension Funds on Other Savings: The Postwar UK Experience," Bulletin of Economic Research, Wiley Blackwell, vol. 37(3), pages 213-29, September.
  9. Schieber, Sylvester J & Shoven, John B, 1996. "Social Security Reform: Around the World in 80 Ways," American Economic Review, American Economic Association, vol. 86(2), pages 373-77, May.
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