MGMT 223 Study Guide - Midterm Guide: Vizio, Customer Switching, Loss Leader
Document Summary
Entered as industry loss leader to capture first mover advantage and capture market share. Economies of scale- the fixed costs that lego does incur (e. g. , from molds) were spread out, allowing it to experience economies of scale. Outsource manufacturing- the physical toy industry itself did not have particularly high fixed costs, because it could outsource some of its manufacturing, including major costs associated with r&d and design: demand side benefits of scale. Network effects- does not apply much to physical products but rather, to platform infrastructure (fb: customer switching costs. Forward integration - credible threat of forward integration for many (h) buyers/distributors: high concentration of retailers. Commoditized product - basically blocks with pegs that fit - many knockoffs. Not commodity in their eyes but rather a branded product. Not very price sensitive: high influence of children. Irrational decision makers who decide what the parents buy (h) threat of substitutes: many substitutes available.
