Final answer:
The statement is false; customer retention is often less costly than attracting new customers. Companies that innovate maintain a competitive edge, leading to higher profits and sustained customer interest. Specialization in core competencies also contributes to business success and customer loyalty.
Step-by-step explanation:
The statement that it is cheaper to attract new customers than to retain current ones is actually false. Customer-centric organizations have come to understand that customer retention is generally less expensive and more beneficial in the long-term than the costs associated with attracting new customers. Businesses that focus on maintaining a core customer base through excellent service and innovation are often more successful.
Market competition spurs innovation, with businesses striving for new technology and better products. As mentioned by Gregory Lee, the pursuit of innovation can lead to higher profits by appealing to consumer desires or by creating more cost-effective solutions. This dynamic not only benefits consumers with better or less expensive products, but it also increases profits for businesses able to innovate effectively. In such a competitive landscape, there's clear advantage to having a temporary edge over competitors.
Furthermore, a focus on core competencies—specialization in one or a few products—can result in greater success for a business compared to spreading efforts over a wide range of offerings. This strategic concentration can lead to stronger brand recognition and customer loyalty, contributing to both profit growth and customer retention.