Strategy Dynamics Briefing 57: Switching costs, delays and limited rationality in customer choices

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Recent briefings have made some simplifying assumptions – that customers switch between rivals for any gain, no matter how small, that they do so instantly, and that they always work out what’s economically optimal – none of which are very realistic!

  1. Switching can require time and effort. Some costs are real, financial expenses. A Windows-PC user switching to a Mac would have to spend a lot on new software. There would also be non-financial costs, such as learning how the new ...
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StrategyDynamics Briefing 56: Rivalry in project-based industries

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In industries where customers buy substantial projects, each contract is effectively a case of type-1 rivalry – either we win it, or a competitor does. Examples include construction projects in civil engineering or process industries, IT projects for government departments, and large consultancy studies. Customers usually ask possible suppliers to submit bids for a project, issuing “invitations to tender” (ITTs) or “requests for proposal” (RFPs). Although suppliers would prefer a continuing relationship, to enjoy a steady stream of all of ...

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