Captive Customer

Published by MBA Skool Team, Last Updated: January 22, 2018

What is 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.

 

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 6 categories.

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