Recent research suggests that, as consumers feel that their choices are restricted, many respond by turning away from the market leader.
Research has shown that several factors influence a company’s ability to retain market leadership. However, one factor has largely been ignored: the psychological forces that drive decisions consumers make and, specifically, the degree to which people feel they have choices. Once people have learned a company’s technology interface, they become more efficient using that interface and are often reluctant to switch to products requiring new skills or allowing limited transfer of current skills.
1 Comment On: Why Dominant Companies Are Vulnerable
I disagree with the assertion that “the key to success seems to be having consumers locked-in while making them feel they are still free to choose.”
Successful companies recognize they must earn their customers’ business each and every day. The key to success is to offer a product or service that is so valuable to the consumer (or business) that they choose not to switch (regardless of if an alternative exists).
Successful companies don’t rest on their laurels or a dominant market position because neither is guaranteed to last. They must innovate or be over-taken. (Apple is good case study.)
Monopolies that remain uninspired and bloated may have short-term successes but create the kind of market dynamics that encourage disruption by new and innovative entrants. http://pivotpointsolutions.net/2010/04/14/customer-service-in-a-monopoly/