BU111 Lecture Notes - Lecture 5: Customer Switching, Switching Barriers, Price Drop
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***use to relate to porter"s five forces (income/profit going up and down, etc) 5 forces - effects on profitability: competitors. Not that many new customers, therefore i may have to steal a customer from another business. Consumers are not as loyal, it is easier for them to switch from company to company. For example: phone plans, if there is low costs to switch, consumers are more likely to move from business to business. Competition stays around longer if there are high exit. Paige robart barriers, however, if it is easy for companies to leave an industry, competition will lower: substitutes. Effects: creates a price ceiling; increases marketing costs. Keep the competitors honest, keep the price ceiling low. Certain demographics will find substitutes more or less attractive than others: potential entrants. Effects: can cause big changes and intensify competition. Lack of capital intensity - economies of scale.
