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Unformatted text preview: ded in an unsuppo rted pro duct o r service)
is directly related to swit ch ing cost s (the co st a co nsumer incurs when mo ving f ro m o ne pro duct
to ano ther) and switching co sts can strengthen the value o f netwo rk ef f ects as a strategic asset. The
higher the value o f the user’s o verall investment, the mo re they’re likely to co nsider the staying
po wer o f any o f f ering bef o re cho o sing to ado pt it. Similarly, the mo re a user has invested in a
pro duct, the less likely he o r she is to leave. Switching co sts also go by o ther names. Yo u might hear the business press ref er to pro ducts (particularly Web sites) as being “sticky” o r creating “f rictio n.” Others may ref er to the co ncept o f
“lo ck-in.” And the elite Bo sto n Co nsulting Gro up is really talking abo ut a f irm’s switching co sts
when it ref ers to ho w well a co mpany can create custo mers who are “barnacles” (that are tightly
ancho red to the f irm) and no t “butterf lies” (that f lutter away to rivals). The mo re f rictio n available
to prevent users f ro m migrating to a rival, the greater the switching co sts. And in a co mpetitive
market where rivals with new inno vatio ns sho w up all the time, that can be a...
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- Winter '14