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Studies have shown that depending on one customer may have several negative effects on a firm,
•
Isolate a firm and stops its reputation spreading over a particular industry.
•
Lose the firm’s autonomy. - For NPD / Innovation process, key customer has to be prioritized in taking major
decisions.
•
Key customer will dominate the NPD / Innovation efforts – no diversification of products, may be small incremental
additions to the existing products of the key customer.
Therefore, when the Key customer ties up a firm in a managerial and technical attention, the resources available for new
product development projects gets limited, thus decreasing the productivity of the firm’s 9A