marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...

and

microeconomics Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics fo ...

, customer switching or consumer switching describes "

customer In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for ...

consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. T ...

s abandoning a product or service in favor of a competitor". Assuming constant

price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...

, product or

service quality Service quality (SQ), in its contemporary conceptualisation, is a comparison of perceived expectations (E) of a service with perceived performance (P), giving rise to the equation SQ=P-E. This conceptualistion of service quality has its origins in ...

, counteracting this behaviour in order to achieve maximal customer retention is the business of marketing,

public relations Public relations (PR) is the practice of managing and disseminating information from an individual or an organization (such as a business, government agency, or a nonprofit organization) to the public in order to influence their perception. P ...

and

advertising Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...

. Brand switching—as opposed to

brand loyalty In marketing, brand loyalty describes a consumer's positive feelings towards a brand, and their dedication to purchasing the brand's products and/or services repeatedly, regardless of deficiencies, a competitor's actions, or changes in the envir ...

is the outcome of ''customer switching behaviour''.

Reasons

Variability in quality or market

price fluctuation In finance, volatility (usually denoted by ''σ'') is the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns. Historic volatility measures a time series of past market pric ...

s—especially a rise in

s—may lead customers to consult price comparison services where alternative suppliers may be offered. Declining customer satisfaction may be due to poor service quality but also—to a lesser degree—be a symptom of boredom with the brand of choice. Brand loyalty can be very strong, however, and the longer a commitment to a brand lasts, the stronger the ties will usually be. According to 2013 Nielsen study on

customer loyalty The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or sur ...

, brand switching can happen for 5 main reasons, but mainly based on price considerations. The overall global averages are: # Better Price (41%) # Better Quality (26%) # Better

Service Agreement A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

(15%) # Better Selection (10%) # Better Features (8%) Because of the dominant role of pricing, market tactics like penetration pricing have evolved to offer a convincing incentive for switching. Along with these are the factors like service inconvenience, poor location, ethical issues like

hard selling In advertising, a hard sell is an advertisement or campaign that uses a more direct, forceful, and overt sales message, as opposed to a soft sell. The term is also used to describe aggressive sales techniques used by company representatives, part ...

or unsafe products and also change in customers' income levels. Another approach is the advertisement of vaporware that seemingly will offer newer or better features than established products without actually possessing any innovation.

Affected sectors

Switching is a significant business factor affecting revenues for companies providing ''continuously delivered services'', as is the case for the energy market as opposed to sectors providing products that stimulate non- or sparsely recurring purchase because of the durability of the product or a general orientation towards casual customers.

Energy customer switching Energy customer switching is a concept stemming from the Energy market, global energy markets. The concept refers to the action of one energy customer customer switching, switching energy supplier, a switch is essentially seen as the free (by choi ...

is a significant risk or success factor for energy suppliers.

Serial switching

The term serial switcher was first coined by Charles Turner and David Alexander in their Customer relationship management course and then their CRM Pocketbook. It describes a person who continually moves his/her patronage from one company to another and highlights the ignorance of many organisations, including credit card companies, who strive for customer acquisition regardless of retention rates. By offering a range of financial incentives, such as free balance transfers or interest free periods, a company may hope to attract new customers. This is superficially attractive to companies if it meets acquisition and competitive switching targets. In practice, however, a serial switcher will not contribute any profit if he/she does not stay long enough to provide a return on investments. The lesson is that lack of integration and analysis across the business allows bad decisions to be made.

References

Brand management Brands Branding terminology Business terms Switching Product management {{marketing-stub

Reasons

Affected sectors

Serial switching

See also

References