Answer :
Final answer:
Increasing customer loyalty can be achieved through loyalty programs, quality customer service, competitive pricing, and targeted marketing. Price discrimination and solutions to market problems such as adverse selection and competitions in quantities are additional concepts addressed in the exercises.
Explanation:
To increase the loyalty of paying customers, there are several effective strategies and tactics businesses can employ. These include:
- Loyalty programs: Offering rewards, points, or benefits for repeat purchases can incentivize continued patronage.
- Quality customer service: Providing excellent service helps build trust and positive feelings, making customers more likely to return.
- Competitive pricing: Keeping prices attractive compared to competitors can help retain cost-conscious customers.
- Targeted marketing: Personalizing marketing efforts to address the specific interests and needs of current customers can strengthen their connection to the brand.
Regarding price discrimination, the best explanation is c) Charging different prices for the same product based on willingness to pay.
A solution to the adverse selection problem in the market is a) Incentive-based contracts, which align interests and can mitigate the issue.
Second-degree price discrimination is best represented by b) Volume discounts, which offer a lower unit price for larger quantities purchased.
In the Cournot model, competitors compete by choosing b) Quantities, which affects market pricing indirectly.
First-degree price discrimination could be approximated by c) Special offers for groups of consumers (e.g., student discounts), where prices vary based on individual characteristics.
Coupons, premium pricing, and discounts based on occupation are examples of strategies businesses use to cater to different customer price sensitivities and enhance sales and loyalty.