assignment#1 - 1. Switching costs as the costs associated...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Switching costs as the costs associated with switching supplier. For example, I take at&t mobile in contract. After that I want to change to T-mobile. For this switching I need to cancel my contract with at&t , I have do another contract with T-mobile, and I need to inform my new mobile number to all my friends. So, the costs involved in this switching are called switching costs. Switching costs may affect price competition in two opposing ways: If consumers are already locked-in (contract, training and learning) one company products, that company can raise the prices until consumers will not switch to a competing company products. Consumers will switch to other company products if the price differential exceeds the barrier determined by the switching costs. If consumers are not locked-in one company products, company will compete intensively with introductory offers in order to create an installed base of consumers, who will subsequently be locked-in with the technology. 2.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/28/2010 for the course TSM 630 taught by Professor John during the Spring '10 term at Mexico Autonomous Institute of Technology.

Page1 / 2

assignment#1 - 1. Switching costs as the costs associated...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online