Management Science Vol. 48 No. 2 2002
Customer Loyalty and Supplier Quality Competition
open access
Abstract
We develop a model of customer choice in response to random variation in quality. The choice model yields closed-form expressions which reflect the effect of competing suppliers' service quality on the long-run fraction of purchases a customer makes at the various competitors. We then use the expressions as the basis of simple normative models for suppliers seeking to maximize their long-run average profits. The results provide insight into the effect of switching behavior on the service levels offered by competing suppliers.
- DOI
- 10.1287/mnsc.48.2.207.256
- Volume
- 48
- Issue
- 2
- Pages
- 207-221
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref