Technology advancement strategy on patronage decisions: the role of switching costs in high-technology markets

Pae, Jae H.; Hyun, Jung Suk

doi:10.1016/j.omega.2004.07.019

Cited by 25 publications

(24 citation statements)

References 27 publications

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“…Low and Johnston, 2006;Al-Kwifi and McNuaghton, 2011). In our study, however, technology incompatibility was found to be an insignificant factor, which contradicts previous findings (Pae and Hyun, 2006;Low and Johnston, 2006); previous studies demonstrated that technology incompatibility is a significant factor in preventing users from moving to a new supplier to renew their capabilities with more attractive technology (Heide and Weiss, 1995). In this study, the supplier's promise to provide support and training in the early stage of switching can play an important role in utilizing the new technology effectively with existing medical technology.…”

Section: Discussioncontrasting

confidence: 99%

Brand switching of high-technology capital products: how product features dictate the switching decision

Al–Kwifi

Ahmed

Yammout

2014

Journal of Product &Amp; Brand Management

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to investigate the factors that underpin brand switching of medical imaging products by mass-market users. Most of the literature on brand switching is focused on competitive market products, for which switching costs are manageable. However, little consideration is given to brand switching of high-technology capital products. Design/methodology/approach -The conceptual model is developed based on the existing literature on B2B brand switching. An online survey was developed and distributed to decision makers involved in purchasing medical imaging technology. Findings -The results confirm the expectation that product features is the most influential factor underpinning brand switching. Product features are critical for medical organizations who want to maintain their competitive advantage. The findings suggest that the set of factors that influence the decision to switch is unique for users of different market segments in the same industry (e.g. lead users and mass-market users). This difference stems from technology utilization of each market segment. Research limitations/implications -In high-technology markets, managers should develop a reliable strategy to evaluate the antecedents behind brand switching that are specific to their industry. Knowledge of the major factors that cause users to switch is essential to allow firms to determine the strategy needed to prevent the erosion of their market share. Originality/value -Although the literature reports considerable research on brand switching, this study is a first-of-its-kind in that it demonstrates that the factors underpinning brand switching vary within the same industry, based on the characteristics of each market segment. This paper develops new knowledge on the factors that influence the decision of users of high-technology capital products to switch between brands to renew or improve their internal capabilities.

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Section: Discussioncontrasting

confidence: 99%

Brand switching of high-technology capital products: how product features dictate the switching decision

Al–Kwifi

Ahmed

Yammout

2014

Journal of Product &Amp; Brand Management

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“…Each MRI product has a different platform and the way to operate it is different. MRI equipment has multiple features to diagnose various diseases, and many features are complex and require considerable time to learn how to use them effectively (Pae and Hyun, 2006). For high-tech capital equipment products in general, difficulties associated with learning and training may favour the incumbent.…”

Section: Cost Of Learning Technologymentioning

confidence: 99%

“…However, ensuring user satisfaction requires continuous improvement in product features and capabilities to meet changing preferences, especially for high-tech products in business markets where access to the latest features can help purchasers to secure a competitive position (Pae and Hyun, 2006). Lead users demand cutting-edge technological features that help them to achieve their objectives and maintain their competitive position (Teplensky et al, 1993;Von Hippel, 1986).…”

Section: Introductionmentioning

confidence: 99%

A model of brand switching by lead users of high-tech capital equipment

Al–Kwifi

McNaughton

2011

IJTMKT

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This study investigates the antecedents of brand switching by lead users of high-tech capital equipment. In markets for capital equipment, the incumbent is usually assumed to have an advantage because of high switching costs. However, much of the research on brand switching focuses on mass-market consumers of competitive products, where switching barriers are manageable. A model of the factors behind brand switching for capital equipment is developed and tested with data gathered by a survey of research centres around the world that use magnetic resonance imaging (MRI) equipment. The results confirm the expectation that lead users are willing to overcome high switching barriers to obtain a new technology when it is essential to renew organisational capabilities that are important to sustaining their competitive advantage. The decision to replace high-tech capital equipment is primarily influenced by the features and capabilities associated with the new product.

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“…... [However], switching to an upgrade module imposes lower switching costs on consumers than shifting technologies entirely." (Pae and Hyun, 2006). The effect of learning costs on customer migration even are stronger when 'bought-in' customers are misinformed about the technologies that are available, and how they work.…”

Section: Definition Of Relevant Consumer Switching Costs For Product mentioning

confidence: 99%

Product Innovation when Consumers have Switching Costs

Salies¹

2012

Handbook on the Economics and Theory of the Firm

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Economists have long recognized that in free markets, incentives to innovate will be diluted unless some factors grant innovators with a temporary monopoly. Patenting is the most cited factor in the economic literature. This survey concentrates on another factor that confers innovators with first-mover advantage over their competitors, namely consumer switching costs, whereby a consumer makes an investment specific to her current seller, which must be duplicated for any new seller. In this survey, we list several components of switching costs that are relevant as regards to firm innovation behaviour. The aim of this classification is twofold. First, consumer switching cost theory has matured to the point that some classification of switching costs for both understanding innovative firm behaviour and building policy-oriented models is necessary. Second, the classification included in this paper addresses the confusion that has been existing so far regarding the distinction between 'good' or 'bad' switching costs, perceived or paid switching costs, and between switching and search costs. This paper then surveys the existing literature on the effect of switching costs on product innovation by firms and the way they compete for consumers. We also raise several important regulation and competition policy questions, using examples from the real world.

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Technology advancement strategy on patronage decisions: the role of switching costs in high-technology markets

Cited by 25 publications

References 27 publications

Brand switching of high-technology capital products: how product features dictate the switching decision

Brand switching of high-technology capital products: how product features dictate the switching decision

A model of brand switching by lead users of high-tech capital equipment

Product Innovation when Consumers have Switching Costs

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