Wooje Cho, Woojung Chang and Dongryul Lee
In responding to competitors' strategic choices, firms must choose whether to allocate their customer relationship management (CRM) resources primarily to retaining existing…
Abstract
Purpose
In responding to competitors' strategic choices, firms must choose whether to allocate their customer relationship management (CRM) resources primarily to retaining existing customers or to acquiring new customers. To address this critical but understudied question, the authors examine the strategic choices of two competing firms between retention- and acquisition-focused strategies in consideration of switching costs, technological advancement level, and market share.
Design/methodology/approach
The authors develop and analyze a game-theoretic model to investigate the strategic choices of two competing firms between retention- and acquisition-focused strategies.
Findings
When switching costs are high, findings show that when the degree of technological advancement is high (low), both firms should employ acquisition-focused (retention-focused) strategies to maximize their profits. When switching costs are low and there are a low degree of technological advancement and asymmetric market shares, the firms choose retention-focused strategies in equilibrium, but only the firm with the higher market share can maximize its profit. When switching costs are low, technological advancement levels are high, and the market shares are asymmetric, the firm with the higher market share chooses a retention-focused CRM strategy, while the rival with lower market share adopts an acquisition-focused strategy in equilibrium. However, neither firm can maximize its profits.
Originality/value
Prior research focused on a single firm's price discrimination decision without considering a competitor's strategic choice. To address this research gap, the authors examine where firms should assign their CRM resources (retention vs. acquisition) in response to a competitor's CRM strategy. This study provides guidance for optimal decision-making regarding a firm's CRM resource allocation in a duopoly market.
Details
Keywords
This paper aims to investigate how to design a firm’s customer demotion policy and communication styles differently for customers demoted from top-tier and bottom-tier to promote…
Abstract
Purpose
This paper aims to investigate how to design a firm’s customer demotion policy and communication styles differently for customers demoted from top-tier and bottom-tier to promote their willingness to restore lost status and loyalty intentions.
Design/methodology/approach
Four scenario-based experiments were conducted in the customer demotion context of an airline’s hierarchical loyalty program. A total of 796 customers recruited from a survey panel participated in the study.
Findings
The results reveal that customers in top-tier demotion significantly increase their willingness to restore lost status and loyalty intentions when a short evaluation period (vs a long evaluation period) is given. Further, customers in bottom-tier demotion improve their willingness to restore and, in turn, their loyalty intentions more with a gain-focused communication style than with a loss-focused communication style. Willingness to restore lost status plays a mediating role in the process by which an appropriate match between demotion type and evaluation period type/communication styles leads to higher loyalty intentions.
Research limitations/implications
This study extends the research stream on customer demotion by examining how to execute customer demotion to mitigate its detrimental effects and facilitate demoted customers’ approach motivation and behavioral intentions, a critical but understudied topic that has been ignored by researchers.
Practical implications
Managers are advised to offer customized customer status evaluation periods and communication styles for top-tier and bottom-tier demoted customers to effectively promote their willingness to restore lost status and loyalty intentions.
Originality/value
This study is among the first to explore the possible varying effects of differential demotion policy and communication style on different tiers of customers.
Details
Keywords
Woojung Chang, Alexander E. Ellinger and Jennifer Blackhurst
As global supply networks proliferate, the strategic significance of supply chain risk management (SCRM) – defined as the identification, evaluation, and management of supply…
Abstract
Purpose
As global supply networks proliferate, the strategic significance of supply chain risk management (SCRM) – defined as the identification, evaluation, and management of supply chain-related risks to reduce overall supply chain vulnerability – also increases. Yet, despite consistent evidence that firm performance is enhanced by appropriate fit between strategy and context, extant SCRM research focusses more on identifying sources of supply chain risk, types of SCRM strategy, and performance implications associated with SCRM than on the relative efficacy of alternative primary supply chain risk mitigation strategies in different risk contexts. Drawing on contingency theory, a conceptual framework is proposed that aligns well-established aspects of SCRM to present a rubric for matching primary alternative supply chain risk mitigation strategies (redundancy and flexibility) with particular risk contexts (severity and probability of risk occurrence). The paper aims to discuss these issues.
Design/methodology/approach
Conceptual paper.
Findings
The proposed framework addresses supply chain managers’ need for a basic rubric to help them choose and implement risk mitigation approaches. The framework may also prove helpful for introducing business students to the fundamentals of SCRM.
Originality/value
The framework and associated research propositions provide a theoretically grounded basis for managing the firm’s portfolio of potential supply chain risks by applying appropriate primary risk mitigation strategies based on the specific context of each risk rather than taking a “one size fits all” approach to risk mitigation. An agenda for progressing research on contingency-based approaches to SCRM is also presented.