Advanced Competitive Strategy | Online Course Support

Which of the following statements about switching costs are true?

 
 

This is exactly the case. As discussed in the lecture, new customers are costly to acquire and in many cases are not profitable right away. So, firms are better off if they succeed in preventing customers from switching to other suppliers.

 
 
 
 

This is correct. As discussed in the lecture, new customers are costly to acquire and in many cases are not profitable right away. But new customers tend to get more profitable over time.

 
 

This is true. Switching costs keep customers from switching to another supplier. Hence, high switching costs (e.g. through a high number of complementary goods or a termination penalty) help firms to prevent customer churn.

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