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Analysis of Impact of Network Externality Product Bundling Announcement Strategy
Shih-Shen Chen1*
1Associate professor, Fuzhou University of International Studies and Trade, Fujian, China
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Abstract:
In the information age, typically buyers bear costs when they change their shopping habits. Therefore, it is indispensable that manufacturers know these costs during transitioning technology and brand for success in the current information economy. Previous research about switching costs emphasized corporate behavioral tactics and corporate competitiveness in the market. However, in these models, customers do not indeed change the account of the business, being charged the same price, and the switching cost is higher enough to prevent conversion. In reality, customers’ brand changes. This research hypothesizes that commodity’s consumption utility with externality increase with an increase of disposable income and externality but decreases with increasing of reservation utility’s shadow price when concerning consumption’s switching cost and endogenizing costumers behavior. When a product announcement makes a consumer group’s preference for externalities greater than that of another consumer group, the externality of its brand announcement inevitably increases. However, to increase the externality, it is necessary to attract more users to join the purchase of the brand, which naturally increases the manufacturer’s request for the creation of forenotice and the switching cost also increases.
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Keywords: Network Externality, Product Announcement, Consumer Preferences
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Received:May 06, 2022; Revised:May 25, 2022; Accepted:June 06, 2022; Published:June 30, 2022
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*Corresponding author; e-mail: chensishen@fzfu.edu.cn
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Citation:Chen, S.S.(2022). Analysis of Impact of Network Externality Product Bundling Announcement Strategy. International Journal of Business Studies and Innovation, 2(2), 31-36. https://doi.org/10.35745/ijbsi2022v02.02.0004
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Copyright: ©
2022
The Author(s). Published with license by IIKII, Singapore. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (CC BY), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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