Final answer:
Customers often choose and remain loyal to a company based on its reputation, which encompasses aspects such as relationship, service, products, and brand. A strong reputation reassures customers of quality and fosters trust, enabling companies to charge higher prices and differentiate their products through intangible aspects and advertising.
Step-by-step explanation:
The main reason why customers buy and stay with one company over another can be attributed to several factors including relationship, service, products, and brand. While each of these plays a significant role, a company's reputation often serves as an overarching determinant influencing customer decisions. Firms that focus on cultivating repeat customers, by establishing a solid reputation through quality products and services, enable customers to have confidence in their purchases, fostering loyalty.
Firms with a good reputation benefit from being able to command higher prices due to perceived value, as seen in the example of a well-established grocery store compared to a temporary stand at a local farmer's market. Additionally, intangible aspects of a product, like promises of satisfaction, service offerings, and branding created through advertising, contribute to product differentiation and customer preference, even when the actual product differences are minimal.