Lock-In and Switching Costs

Question 1

What is the definition of lock-in?

Answer 1

Lock-In is making customers dependent on them for products and services by making it hard to switch to a competitor without substantial costs.

Question 2

Why are customers reluctant to switch from existing choices?


Answer 2

Because the costs of switching are greater than the gains from switching.

Question 3

What are switching costs?

Answer 3

costs that a customer incur when switching brands, products, services, or suppliers

Question 4

What are the 3 characteristics of loyal customers in marketing?


Answer 4

increased purchase frequency and amount, reduced price sensitivity, and increased engagement in repeat patronage.

Question 5

What are the 5 main lock-in strategies?

Answer 5

Contractual commitments
Brand-specific training
Information and databases
Search costs
Loyalty programs

Question 6

what is the objective of Customer Relationship Management (CRM)?

Answer 6

To develop stronger relationships with customers by optimising interactions with them, and better understanding their needs and behaviours

Question 7

How is CRM implemented?

Answer 7

CRM is implemented by integrating software, processes, and strategies to manage customer interactions, streamline operations, and analyse data for improving relationships and driving business growth.

Question 8

What are the 4 keys to successful implementation of CRM?

Answer 8

Strong leadership, strategic planning, clear performance measures, and a coordinated program applying new tech