Home › BBA Marketing › Marketing › Creating Products and Pricing Strategies › Why do the costs of a firm tend to fall as it re…
Why do the costs of a firm tend to fall as it retains more customers?
AExisting customers pay a higher price than new ones do
BRetained customers buy only the cheapest items on sale
CServing existing customers costs less than attracting new
DRetained customers need no product support of any kind
Answer & Solution
Correct answer: C. Serving existing customers costs less than attracting new
1. Companies gain repeat sales and referrals from customers they keep.
2. Costs fall because serving an existing customer is less expensive than attracting a new one.
3. The saving comes from the lower cost of service, not from charging loyal buyers more.
4. Retained customers still need support, so the claim that they need none is wrong.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 11 "Creating Products and Pricing Strategies to Meet Customers' Needs", section 11.1 The Marketing Concept_
Related questions
Big data and analytics are used to provide consumers with which two things?Big data refers to which of the following?Database marketing is sometimes given which other name?What does the information in a marketing database help managers do?One-to-one marketing means creating what?What are shopbots?How does online technology help sellers rather than buyers?What effect has the internet had on pricing power?