A model of customer complaint management is developed in terms of defensive marketing strategy. Based on an explicit microfoundation, firms' incentives to manage complaints are analyzed. In the context of a monopoly and homogeneous oligopoly, we discuss the optimal levels of customer...

Two concepts of brand loyalty are defined, “inertial” brand loyalty resulting from time lags in awareness, and “cost-based” brand loyalty resulting from intertemporal utility effects. Their market level implications are formally derived in a continuous time model. It is found that...

We present an analysis of equilibrium in markets with asymmetrically informed consumers. Some consumers know both price and quality of all sellers, whereas others know neither but may search among sellers. The equilibrium correlation between price and quality generally increases with the level...

The paper provides a formal rationale for the common practice of using sales assistance. The argument is made in a model where a consumer's situation determines his needs. The products are differentiated and the map identifying the best match between a consumer's situation and a product is known...

Side payments, known politely as gainsharing and pejoratively as bribery, are prevalent in marketing. Indeed, many management schools have added ethics modules to their basic marketing courses to discuss these issues and there is much discussion of side payments in the literature (e.g., Adams...

This note provides a formal proof that for the Defender model, with uniformly distributed tastes, the Nash price equilibria exist and, for a given set of positions, that they are unique. We also show that the profit function is well-behaved—continuous and quasi-concave—and that the maximum...

A contract with -class pricing divides a large set of goods or services into classes and assigns a single price to any element of a class. While the literature has emphasized rationales based on screening, this paper looks at the implications of costly pricing. My analysis suggests that class...

Customer satisfaction incentive schemes are increasingly common in a variety of industries. We offer explanations as to how and when incenting employees on customer satisfaction is profitable and offer several recommendations for improving upon current practice. Faced with employee groups...

The paper offers a comparative analysis of different ways to sell products (selling formats) when buyers incur evaluation costs. Since these costs are sunk at the moment of trade, buyers may refrain from incurring them for fear of later opportunism on the part of sellers. It is found that the...