Analysis of the AFP Industry Using Customer Lifetime Value

2015. Proceedings of the 2007 Academy of Marketing Science (AMS) Annual Conference. Developments in Marketing Science: Proceedings of the Academy of Marketing Science 2015, p 111

Enrique Manzur M, Pedro Hidalgo C, Sergio Olavarrieta S

Abstract:

Understanding the long-term price matching effects on consumers is important to evaluate the effectiveness of these policies in stimulating customer retention. In industries with low product differentiation and low consumer involvement (e.g., AFP Industry), it can be seen that choosing a product is based on habitual purchasing behavior (inertia). The objective of this article is to analyze the competitor convenience of improving customer retention by matching the lowest price in the AFP Industry. Results suggest that matching the industry’s price leader reduces the company’s CLV, diminishing competitor incentives to make this marketing effort.

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