Retailers that cannot or do not wish to compete on price face the formidable task of trying to retain customers while charging higher prices for equivalent merchandise. Prior research demonstrates that in the face of competitive price threats, developing relationships with customers may be effective in discouraging customer defection. Yet the cultivation of customer relationships may require a considerable resource commitment or run the risk of infringing upon customers' relationship preferences. Results from a study we conducted demonstrate that the appropriateness of different relationship strategies as a deterrent of customer defection is contingent upon the intensity of the threat from price competition. More resource-intensive relational strategies may be needed to ensure customer retention in the face of severe price competition, whereas a lower level of resource commitment may be sufficient to successfully contest more moderate price threats.
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