Captive Customer

Posted in Marketing and Strategy Terms, Total Reads: 1194
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Definition: Captive Customer

Captive customers are the customers who are “captured “by a product /vendor and are resistant to use another product/vendor primarily because of the following reasons:


• The costs involved in switching to a competitor is high

This may be primarily because of the following reasons

-The customer has invested a lot of time in adapting to the product

-The customer’s preferences and choices are not yet mastered by the competitors

-Traditionally the customers have been using it since a long time and they are reluctant in being accustomed to a different product altogether

-The customer may not want to lose the advantages of the products such as offers , complementary products etc

• The costs involved in searching for a competitor is high . This is the case specially when the customer searches for a new product/service.

• The product/vendor has become a habit for the customer


The captive customer can be of great competitive advantage for any firm. The firms may encourage purchases by the captive customers through discounts, loyalty programs and various offers. They may also reinforce the competitive advantage by adding new features to the product. The firms may lose such competitive advantage in cases when the competitor’s switching and searching costs are reduced.

 

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