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IOT5028 Creativity, Innovation and New Digital

Technologies

LOCK – IN & SWITCHING COSTS : JOANNA BORG

EXPECTATIONS MANAGEMENT : NITTEN NAIR

ALLIANCES : BILU LI
LOCK-IN AND SWITCHING COSTS
First and foremost, one must understand that switching from one information network to another;
buyers must keep in mind the costs which they have to endure. Thus, understanding these type of costs
when changing technologies, is fundamental in making today’s economy succeed.( Information Rules:
A Strategic guide to the Network Economy, p 103.)
Lock-In and Switching Costs go hand-in hand. Thus, users can face lock-in when switching from one
brand of technology to another.( Information Rules: A Strategic Guide to Network Economy, p 104). A
perfect example of Lock-in is when Bell Atlantic found itself relying on AT&T to provide the right
upgrades for the operating system. As a result, it was expensive for Bell Atlantic was locked into AT&T
switches.( Information Rules: A Strategic Guide to the Network Economy, p 105-106).
Another example of Lock-in is when a consumer is using Mac software. This particular buyer is used to
Mac and most probably trades files with other Mac users. If this buyer switches brands, he or she
would have to upgrade or they are locked-in in the system (Information Rules: A Strategic Guide to the
Network Economy, p 104).
When Yahoo was invented, it proved to be a brilliant idea, as the Internet was still not a very practical
tool because of the long lists it presented. It also tried to make the customers buy something he or she
did not need. Nevertheless, it required tons of money to make it work.(True story of the Internet,
youtube.com).
In 1985, yahoo users multiplied; thus, the more they multiplied the more money they generated. When
Excite, Yahoo’s rival became popular, in 1987, the Internet exploded, hence, Internet users increased.
( True story of the Internet, youtube.com).
In conclusion, “to understand lock-in, look ahead and reason back.” (Information Rules: A Strategic
Guide to the Network Economy, p104).

Bibliography
 Information Rules: A Strategic Guide to the Network Economy by Carl Shapiro and Hal
R.Varian.
 http://www.youtube.com/watch?v=7Bv6bifQnLw, True story of the Internet.
EXPECTATIONS MANAGEMENT

“A process to constantly strive to discover, match and exceed the perceived


expectations of any product or service by the consumer in reality and
totality .”(M.D.Rao, 2005)

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Customer expectation

The case of the search engine wars between Yahoo and Google is a classic example of one
company/product completely losing sight of the customers expectations and another company
immediately recognising the actual expectation and exceeding it.

Yahoo was a pioneer in the search engine spectrum of the Internet, being the first to emerge and
establish its stranglehold in the market. But in the process of finding a way to generate revenue, they
failed to analyse what the user actually wanted and their reactions to the “improvements” brought on by
the company.

Google on the other hand was a comparative late entrant into the field. But, they on the other hand
focused on the consumer and what they expected. The search engine was no longer a new concept
anymore but there were many major improvements that Google brought about that in many ways was
totally user centric.

Certain key points to be noticed in Google's rise as the market leader can be explained in the table
below

EXISTING USER EXPECTATION THE GOOGLE EXPERIENCE


Pop up and banner ads everywhere Minimal and subtle advertising
Irrelevant sites and information New software that produced only relevant sites
Time consuming for relatively simple information Quick and more efficient

This clearly illustrates how Google managed to claim market leadership despite the fact that it was a
late entrant and also faced the risk of Lock In's and switching costs. A user oriented approach with the
main focus lying in meeting and exceeding consumer expectations is clearly the backbone of any
industry that is consumer oriented.

A similar approach has been adopted by the Marriott International Group of Hotels whose main policy
has always been consumer centric. A few of their widely reknowned practices and slogans include:
• We think of creative ways to say “Yes”.
• We give our guests a WOW experience every single time.

The main focus here is not only to understand the expectations of the consumer but to always exceed
the expectation in every possible way.

Biblography

• Principles of Marketing – Philip Kotler


• Basic Marketing management – M. D. Rao
• Spirit to Serve – Bill Marriott
• www.youtube.com