Customer acquisition and customer retention in a competitive industry

Conference paper


Lianos, G. and Sloev, I. 2016. Customer acquisition and customer retention in a competitive industry. Petruzzellis, L. and Winer, R. (ed.) Springer. pp. 541-552 https://doi.org/10.1007/978-3-319-29877-1_111
TypeConference paper
TitleCustomer acquisition and customer retention in a competitive industry
AuthorsLianos, G. and Sloev, I.
Abstract

We study optimal customer acquisition and retention strategies in an infinite-horizon model of dynamic competition. We find that acquisition expenditures constitute the larger share of the marketing budget, when the customer profit margin is either low or large, but for intermediate profit margin values, firms spend more resources for customer retention. If customer profit margins rise for exogenous reasons, we find that the share of customer acquisition expenditures in the marketing budget increases in markets with high profit margins, whereas it decreases in markets with low profit margins. The impact of entry of new firms in the market on the optimal strategy depends on the effect of the entry on profit margins and absolute levels of profit margins. A similar phenomenon may also appear in a single segmented market: the impact of higher competition on the luxury and mass- consumption segments of a market would be different.

Research GroupCorporate Social Responsibility and Business Ethics group
Strategic Marketing, Consumer Behaviour and Branding/Identity group
Page range541-552
SeriesDevelopments in Marketing Science: Proceedings of the Academy of Marketing Science
EditorsPetruzzellis, L. and Winer, R.
ISBN
Hardcover9783319298764
PublisherSpringer
Publication dates
Online28 Jun 2016
Publication process dates
Deposited16 May 2019
Output statusPublished
Copyright Statement

© Academy of Marketing Science 2016

Additional information

The 18th AMS World Marketing Congress, Bari, Italy, July 14-18, 2015

Digital Object Identifier (DOI)https://doi.org/10.1007/978-3-319-29877-1_111
LanguageEnglish
Book titleRediscovering the Essentiality of Marketing: Proceedings of the 2015 Academy of Marketing Science (AMS) World Marketing Congress
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