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An executive summary for managers and executive readers can be found at the end of this article.
Introduction
The Customer Relationship Management (CRM) literature has long advocated that a successful relationship strategy involves meeting customers' needs by facilitating customized solutions on a one-to-one basis ([58] Payne and Frow, 2005; [56] Palmatier et al. , 2008; [66] Sajtos et al. , 2010). To fulfill this one-to-one premise, firms may choose to direct their marketing efforts and attention to customers who they estimate are able to yield the most profit over their customer lifetime ([64] Rust et al. , 2004; [41] Lewis, 2005; [38] Kumar et al. , 2010). In retailing, Dell's product customizations, T-Mobile's differing price subscriptions for call load, or Amazon.com's frequent updates about newly released books, are well-known examples of efforts to acquire and retain customers on these grounds. As a result, firms will select the customers they want to serve, favor those who are most profitable, and devote little marketing budget to customers who do not fit their targeting strategies ([4] Barone and Roy, 2010).
However, research suggests that such favoritism and differential treatment of customers may cause perceptions of unfairness ([8] Bolton et al. , 2003; [11] Boulding et al. , 2005; [43] Lo et al. , 2007; [9] Bolton et al. , 2010; [51] Nguyen, 2012). Firms' attempts to build learning relationships with customers, in order to customize individual services, have resulted in a process where meeting customers' needs on an individual basis imposes a strategy whereby one customer will receive better treatment than another ([53] Nguyen and Simkin, 2009). Research shows that these same mechanisms of inequality may lead to perceptions of unfairness ([13] Campbell, 1999; [15] Cox, 2001; [19] Feinberg et al. , 2002; [27] Haws and Bearden, 2006; [31] Homburg et al. , 2007; [1] Abela and Murphy, 2008). For example, Amazon.com's test use of dynamic pricing was a public relations nightmare for the company. As [19] Feinberg et al. (2002) put it: "Few things stir up a consumer revolt quicker than the notion that someone is getting a better deal. That's a lesson Amazon.com has just learned... Amazon was recently revealed to be selling the same DVD movies for different prices to different customers". The idea...