When would buyers have a strong bargaining power vis-a-vis sellers (except the number of buyers, price-sensitivity, and switching costs)?
What are the examples of switching costs (other than long-term contracts or finding a new doctor/mechanic)?
In what cases is it easy or inexpensive for you to change a service provider that you’ve been dealing with? (i.e. little switching cost)
What are the examples of a bundle around us? (other than what discussed in-class – cable/Internet, Xbox/game, elevator/service, Microsoft Office, etc.)
13 Responses to Online discussion questions – Sep 12
Another example of switching costs that I think of is the choice of MAC and Window. People like me who like to use Window system because you can download a lot free stuff on the internet. However, if you are switching from Window to MAC system, there will be less choice for you because that app might not support by MAC system or there might be a money requirement for that app.
Being able to have strong bargaining power in business is very important because that will determine who has more leverage over another company. For example, health care providers has a strong bargaining power because consumer is more worried about their health than being able to afford the procedures.
Switching cost can vary from an actual price difference when making a switch or the time and relationship lost due to switching providers. For example, my personal experience on switching cost would be playing on different hockey teams every year growing up. I lost out on the synchronization with my teammates every year so therefore it is hard to improve when working with different teammates every year.
One example of low switching cost is switching music streaming services. For example switching between Apple Music, Tidal, and Spotify is fairly easy because all of the content is web hosted so you never really had anything to lose. You can simply start using the new service and in most cases you will have access to a similar library of music.
Another example of a bundle is a fast food meal. At a fast food restaurant you can usually add fries and a drink to a sandwhich for a very low price. For example if you go to Mcdonalds and want a $5 burger but a burger with fries and a drink is only $6, you are likely to get the combo meal because you are getting fries and a drink for only $1.
One example of a low switching cost:
Saving documents to a USB was how I would save all my school work, music or pictures. I would have to purchase multiple USB drives for each class. Now I keep much of my work on Temples Owl box, Google Doc/sheet/slides and Microsoft One Drive. These are free services that are offered, or we could say they are “Bundled” in with the cost that is paid with my tuition. In addition to the low switching cost, I gain the added bonus of having the information available to retrieve from anywhere I am.
What are the examples of switching costs?
Switching cost can be material or non-material. For example, changing phone number can be a switching cost. Changing to new phone number will cause you a lot of time to notify everyone that your phone number has changed. That is why we always keep same phone number.
An example of a switching cost is switching to a new job. By switching to a new job, you may lose the benefits provided by the organization that can only be obtained by being an employee for a particular time. For example, my current employer only provides healthcare, tuition reimbursement and matching 401K after six months of employment. The individual may have also taken a new job that pays less therefore the switch cost the difference in payroll. Lastly, the individual now must learn the new company culture, re-build relationships with employees and learn any procedures and systems used by the current job.
An example of bundling is vacation packages. Generally, booking bundling packages such as hotel, flight and car rentals will result in a lower price than booking each thing separately. Companies also understand that planning a vacation may be difficult as it typically includes more than one person therefore providing this convenience of a “one stop shop” would be ideal for the individual.
An example of inexpensive switching cost is using kindle instead of regular paper version books. E-book is more convenient, lighter, and the price is lower.
An example of a bundle around us could be: Sony offers special packages for customers who want to purchase cameras. The packages include a camera, zoom lens, storage card and gadget bag. the bundle price is much cheaper than the cost of making separate orders.
An example of a bundle would be protection plans and a laundry dryer. Recently, I brought a laundry dryer from Sears that cost $500 and it offered me a protection plan that cost $165 for the dryer for three years. The protection plan includes parts and labor for the dryer maintenance. As a consumer, I think it is a good deal for repair and it is an insurance, because it will cost $200 for an examination fee if there is no protection plan. As a company who sells dryers, it is a good bundle to sell services, to collect more money from consumers and to increase revenue.
An example of an inexpensive switching cost of changing service provider is being able to easily change your tv and or movie streaming service. For example switching between Netflix, Hulu, Amazon video, and or tv apps such as sling tv. All the services have similar tv show and movie content. It is easy to canceling your membership/subscription on the website of the service and sign up for the other service.
Examples of bundling around us currently for example is restaurant week which offers the customer a 3 or 4 course meal of specific appetizers, entrees, and deserts for $25 for lunch or $35 for dinner when the items separately would cost $50+. Another example of bundling is with textbooks when they bundle the ebook and online learning management software. For example it would cost $75 to buy the webassign or mymathlab access code and $50 to get the textbook seperatly, but getting the online textbook with the access code would cost $100.
1. When the demand of the buyers tends to be relatively low, and buyers want to sell the stock as soon as possible, the bargaining power of buyers would be stronger.
2. Cancellation fees of switching to another airline; University deposit (suppose you have paid for it) if you decide to take the offer from another school.
3. When I’m using a non-contractual prepaid sim card, I tend to have to worry little about changing carrier.
4.Pearson My Lab bundles Accesscode, Textbook, and eText.
An example of switching cost is when someone switches cell phone service carriers. They will have to cancel their service and suffer an early termination fee and buy another phone that will be compatible with the new service provider.
An example of price bundling is when buying computer parts that are compatible with each other. People tend to buy parts at whichever store has the cheaper price on the product, but if the products are bundled and they save money from buying it together from the same company, it will help consumers save money and allow the company to make an extra sale.
Buyers have a strong bargaining power when they are purchasing a product that can be found in any store. If a store is selling bottles of water, the water has to be cheap, because a customer can find a bottle of water anywhere. The customer can even go home and drink water out of the sink. This gives customers bargaining power when buying bottled water.
Also, it is easy to switch cellular service providers, because there are several competing cellular service providers. If a customer wants to switch from Verizon to T-Mobile, T-Mobile will do everything it can to lower the switching cost, because it wants to increase its market share.
It is easy to shift to a service provider or a different product when the switching cost is very low. This happens when there are various substitutes of the product available with minimal variation. For Example, the apparel industry. If I am looking for a particular item of clothing like a scarf, it is easy for me to find one across various clothing stores. I could also easily purchase it online without being concerned about switching costs.
Another example of switching costs that I think of is the choice of MAC and Window. People like me who like to use Window system because you can download a lot free stuff on the internet. However, if you are switching from Window to MAC system, there will be less choice for you because that app might not support by MAC system or there might be a money requirement for that app.
Being able to have strong bargaining power in business is very important because that will determine who has more leverage over another company. For example, health care providers has a strong bargaining power because consumer is more worried about their health than being able to afford the procedures.
Switching cost can vary from an actual price difference when making a switch or the time and relationship lost due to switching providers. For example, my personal experience on switching cost would be playing on different hockey teams every year growing up. I lost out on the synchronization with my teammates every year so therefore it is hard to improve when working with different teammates every year.
One example of low switching cost is switching music streaming services. For example switching between Apple Music, Tidal, and Spotify is fairly easy because all of the content is web hosted so you never really had anything to lose. You can simply start using the new service and in most cases you will have access to a similar library of music.
Another example of a bundle is a fast food meal. At a fast food restaurant you can usually add fries and a drink to a sandwhich for a very low price. For example if you go to Mcdonalds and want a $5 burger but a burger with fries and a drink is only $6, you are likely to get the combo meal because you are getting fries and a drink for only $1.
One example of a low switching cost:
Saving documents to a USB was how I would save all my school work, music or pictures. I would have to purchase multiple USB drives for each class. Now I keep much of my work on Temples Owl box, Google Doc/sheet/slides and Microsoft One Drive. These are free services that are offered, or we could say they are “Bundled” in with the cost that is paid with my tuition. In addition to the low switching cost, I gain the added bonus of having the information available to retrieve from anywhere I am.
What are the examples of switching costs?
Switching cost can be material or non-material. For example, changing phone number can be a switching cost. Changing to new phone number will cause you a lot of time to notify everyone that your phone number has changed. That is why we always keep same phone number.
An example of a switching cost is switching to a new job. By switching to a new job, you may lose the benefits provided by the organization that can only be obtained by being an employee for a particular time. For example, my current employer only provides healthcare, tuition reimbursement and matching 401K after six months of employment. The individual may have also taken a new job that pays less therefore the switch cost the difference in payroll. Lastly, the individual now must learn the new company culture, re-build relationships with employees and learn any procedures and systems used by the current job.
An example of bundling is vacation packages. Generally, booking bundling packages such as hotel, flight and car rentals will result in a lower price than booking each thing separately. Companies also understand that planning a vacation may be difficult as it typically includes more than one person therefore providing this convenience of a “one stop shop” would be ideal for the individual.
An example of inexpensive switching cost is using kindle instead of regular paper version books. E-book is more convenient, lighter, and the price is lower.
An example of a bundle around us could be: Sony offers special packages for customers who want to purchase cameras. The packages include a camera, zoom lens, storage card and gadget bag. the bundle price is much cheaper than the cost of making separate orders.
What are the examples of a bundle around us?
An example of a bundle would be protection plans and a laundry dryer. Recently, I brought a laundry dryer from Sears that cost $500 and it offered me a protection plan that cost $165 for the dryer for three years. The protection plan includes parts and labor for the dryer maintenance. As a consumer, I think it is a good deal for repair and it is an insurance, because it will cost $200 for an examination fee if there is no protection plan. As a company who sells dryers, it is a good bundle to sell services, to collect more money from consumers and to increase revenue.
An example of an inexpensive switching cost of changing service provider is being able to easily change your tv and or movie streaming service. For example switching between Netflix, Hulu, Amazon video, and or tv apps such as sling tv. All the services have similar tv show and movie content. It is easy to canceling your membership/subscription on the website of the service and sign up for the other service.
Examples of bundling around us currently for example is restaurant week which offers the customer a 3 or 4 course meal of specific appetizers, entrees, and deserts for $25 for lunch or $35 for dinner when the items separately would cost $50+. Another example of bundling is with textbooks when they bundle the ebook and online learning management software. For example it would cost $75 to buy the webassign or mymathlab access code and $50 to get the textbook seperatly, but getting the online textbook with the access code would cost $100.
1. When the demand of the buyers tends to be relatively low, and buyers want to sell the stock as soon as possible, the bargaining power of buyers would be stronger.
2. Cancellation fees of switching to another airline; University deposit (suppose you have paid for it) if you decide to take the offer from another school.
3. When I’m using a non-contractual prepaid sim card, I tend to have to worry little about changing carrier.
4.Pearson My Lab bundles Accesscode, Textbook, and eText.
An example of switching cost is when someone switches cell phone service carriers. They will have to cancel their service and suffer an early termination fee and buy another phone that will be compatible with the new service provider.
An example of price bundling is when buying computer parts that are compatible with each other. People tend to buy parts at whichever store has the cheaper price on the product, but if the products are bundled and they save money from buying it together from the same company, it will help consumers save money and allow the company to make an extra sale.
Buyers have a strong bargaining power when they are purchasing a product that can be found in any store. If a store is selling bottles of water, the water has to be cheap, because a customer can find a bottle of water anywhere. The customer can even go home and drink water out of the sink. This gives customers bargaining power when buying bottled water.
Also, it is easy to switch cellular service providers, because there are several competing cellular service providers. If a customer wants to switch from Verizon to T-Mobile, T-Mobile will do everything it can to lower the switching cost, because it wants to increase its market share.
It is easy to shift to a service provider or a different product when the switching cost is very low. This happens when there are various substitutes of the product available with minimal variation. For Example, the apparel industry. If I am looking for a particular item of clothing like a scarf, it is easy for me to find one across various clothing stores. I could also easily purchase it online without being concerned about switching costs.