5 terms

Ch. 7: Network Effects

STUDY
PLAY
network effects
Occur when the value of a product or service increase as its number of users grows
When present, network effects are among the most important reasons you will pick one product or service over another
more users = more value
other names for network effects
Metcalfe's Law
network externalities
sources of network effects
exchange
staying power
complementary benefits
What is Technological Leapfrogging
Competing by offering a new technology that is so superior to existing (offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits)
strategies for competing in markets with network effects
move early
subsidize product adoption
leverage viral promotion
expand by redefining the market to bring in new categories of users or through convergence
alliances and partnership
distribution channels
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