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Do switching costs really provide a first‐mover advantage?

Do switching costs really provide a first‐mover advantage? Purpose – The purpose of this article is to present a model that compares the switching costs that consumers face when they buy pioneering and follower products. Design/methodology/approach – A study of 255 new products indicates that switching costs are actually higher when switching from an existing product to a pioneering product. Findings – The study shows that people who buy a pioneering product may also face switching costs, if the pioneering product is launched in an existing category where consumers are already familiar with similar products. Research limitations/implications – The results help to reinforce the view that first movers have advantages and demonstrate that switching costs do not lead to a higher level of consumer retention. Practical implications – This study provides interesting managerial implications on how to launch new products more effectively when they suffer from switching costs.. Originality/value – Researchers commonly view switching costs as a barrier to market entry that protects enterprises that launch pioneering products and gives them a competitive advantage over those that launch follower products. The underlying idea is that people only experience switching costs when they change to a different follower product, rather than when they purchase a pioneering product instead of the product that they usually purchase. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Marketing Intelligence & Planning Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
0263-4503
DOI
10.1108/02634501211211966
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this article is to present a model that compares the switching costs that consumers face when they buy pioneering and follower products. Design/methodology/approach – A study of 255 new products indicates that switching costs are actually higher when switching from an existing product to a pioneering product. Findings – The study shows that people who buy a pioneering product may also face switching costs, if the pioneering product is launched in an existing category where consumers are already familiar with similar products. Research limitations/implications – The results help to reinforce the view that first movers have advantages and demonstrate that switching costs do not lead to a higher level of consumer retention. Practical implications – This study provides interesting managerial implications on how to launch new products more effectively when they suffer from switching costs.. Originality/value – Researchers commonly view switching costs as a barrier to market entry that protects enterprises that launch pioneering products and gives them a competitive advantage over those that launch follower products. The underlying idea is that people only experience switching costs when they change to a different follower product, rather than when they purchase a pioneering product instead of the product that they usually purchase.

Journal

Marketing Intelligence & PlanningEmerald Publishing

Published: Mar 23, 2012

Keywords: Order of entry; Switching costs; Speed to market; Market performance; Financial performance; Consumers

References