Final answer:
A customer-share strategy focuses on selling a diverse range of products to single customers, enhancing customer loyalty and increasing the value derived from each customer. It is closely related to the concept of product differentiation, wherein companies distinguish their products from competitors to create unique offerings. Advertising supports both strategies by building brand perception and promoting the distinctive features of products.
Step-by-step explanation:
A customer-share strategy refers to an approach where a business aims to sell as many products as possible to one customer at a time. This contrasts with strategies focused on constantly finding new customers or relying heavily on mass media for brand building. In practice, a customer-share strategy may involve deepening relationships with existing customers, cross-selling multiple products, and increasing customer loyalty and lifetime value.
When discussing product differentiation, we refer to actions taken by firms to distinguish their products from those of competitors. This can be achieved through various attributes such as the physical aspects of the product, its location, intangible aspects, and the public's perception of the product. Such differentiated products are viewed uniquely by consumers compared to those of competitors. Effective product differentiation may lead to a more inelastic perceived demand curve or shift the demand curve to the right, increasing a firm's quantity sold or enabling it to charge higher prices, thus maximizing profits.
Advertising plays a key role in product differentiation by conveying to potential buyers how a product is unique. In a monopolistic competition framework, successful advertising can lead to increased demand or less price sensitivity among consumers. Firms engage in advertising strategies not just to differentiate their products but also to support their overall customer-share strategy by reinforcing brand loyalty and encouraging repeat purchases.