Customer Retention in the Automotive Industry - An Economic Analysis

  • Barbara E. Weißenberger
Chapter

Abstract

Customer retention can be analyzed from the behavioral as well as from the economic point of view. Event though econcomic analysis implies only a stereotyped view of the relationship between buyer and seller without the richness of variables that may be used in behavioral analysis, it nevertheless helps to better understand the ‘skeleton’ of market interaction. In this paper we propose an economic analysis focusing on the influence of hidden action problems on customer retention in the automotive industry. We are able to show from an economic point of view that customer retention can be explained as a rational buyer behavior, since a long-term relationship generally helps to reduce agency costs if some type of contingent contract with the seller can be established.

Keywords

Expected Utility Agency Cost Credence Strategy Experience Quality Customer Retention 
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Copyright information

© Betriebswirtschaftlicher Verlag Dr. Th. Gabler GmbH, Wiesbaden 1997

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  • Barbara E. Weißenberger

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