BU111 Lecture Notes - Lecture 8: Customer Switching, Small Appliance, Ibuprofen
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Any electrical appliance must fit standard wall outlet. Each concept is important on its own; become more important in group. Link each technology concept back to the five forces. The larger, the greater the influence of the company. Lots of people locked in to your company = almost guaranteed to achieve financial performance for a while. Switching costs cost to move to a new system. Size of consumer"s investment in order to use your goods and services. Sometimes financial (game systems), sometimes time based time (learning costs) Lock-in and switching cost high less chance of customers switching to competition. Companies try to reduce switching costs to win over customers ex. Not usually produced by the original provider of the good or service. Creates a vicious cycle for new entrants to market, virtuous cycle for established forces. The bigger the installed base, the more valuable the product. First move advantages preemption capture the installed base before competition.
