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EKONOMI INFORMASI
                      Managing Lock-In


       Mohamad Ariefiandi Nugraha : 23511028
       Samsun H : 23511103
       Kadek Suar Wibawa : 23511087




1
Apa itu Lock In?

Suatu kondisi dimana
konsumer tergantung
kepada suatu produk atau
layanan dari satu vendor,
sehingga bila konsumer
akan beralih ke vendor
lain akan diperlukan biaya
yang besar dan
ketidaknyamanan
2
Keuntungan Lock In



    Buyer
    • mendapatkan layanan yang lebih dari produsen dengan harga
      yang lebih rendah
    • memiliki pilihan untuk beralih dari satu produk ke produk lain
      dengan switching-cost yang rendah bahkan bisa tanpa
      switching –cost dikarenakan para produses berkompetisi
      menekan biaya switching-cost

    Seller
    • mendapatkan kesempatan keberlanjutan bisnis dengan
      konsumen yang selalu setia

3
Tug of War Between Buyers & Sellers

    • Sellers
        Hope to profit
        from locked-in
        buyers.




4
Tug of War Between Buyers & Sellers

    • Buyers
     Seek to strengthen
     bargaining position by
     keeping their options
     open


5
Lock Strategy for Buyer


                 Brand
                selection



      Lock In               Sampling



                Entrenc
                hment
6
Strategy for Buyer


    • Menawar pada awal proses lock-in
    • Membatasi ketergantungan:
      – Dual sourcing
      – Permintaan kompensasi pada setiap step
    • Melakukan parsial kontrak
      – Kemungkinan untuk penurunan kualitas produk




7
Lock Strategy for Seller




    Invest          Entrenchment    Leverage




8
Investing in an Installed Base Customers



    •   Perhatikan lock-in cycle
    •   Selalu mencari pelanggan baru
    •   Rencanakan kerjasama seumur hidup
    •   Mengembangkan produk dan layanan
    •   Menerapkan Multiplayer Strategies
    •   Dapatkan customer yang berpengaruh

9
Encouraging Customer
                Entrenchment




     •   Entrenchment by Design.
     •   Loyalty Programs & Cumulative Discounts




10
Laveraging Your Installed Base


     • Menjual Produk Tambahan
     •   Menjual Akses Terhadap Konsumen
     •   Menyediakan Beberapa Versi Harga
     •   Meminimalkan Search Cost terhadap
         produk kita.
     •   Memanfaatkan Keuntungan menjadi First-
         Mover
     •   Mengontrol Cycle Length
11
Strategy for Sellers

 • Design products and promotions to attract
   customers
 • Lengthen and strengthen cycle
 • Sell complementary products to these consumers
 • Tension: claim openness, but don’t deliver
     – Example: simple open interface (RTF), powerful
       closed interface (DOC)



12
Basic Tension in Buyer’s Strategy



     • Say you have large switching costs to get
       large compensation
     • But want to minimize lock-in as much as
       possible




13
Strategic Variables in
                    Lock-in Cycle


     •   Magnitude of switch costs
     •   Loyalty programs
     •   Cumulative volume discounts
     •   Rely on infotech
         – Loyalty programs will become more
           widespread
         – Convert conventional markets to lock-in
           markets
14
Loyalty Programs

     • Requirements contracts
     • Frequent buyer program
     • Tension with promotions -- offer better deal to
       non-customers
     • Burden of locked-in customers: offer too high
       a price to attract new customers
       – Price discrimination, stripped down product
     • Consumer switch costs
       – Will go down due to Internet
15
Multiplayer strategies

     • Decision maker and payer
       – Frequent flyer miles
       – Infant formulas at hospitals
       – Automobile tires
     • Buyers of complements
       – Different customers buy razors and blades
       – Subsidize the far-sighted group, tax the short-
         sighted group
          • BBS operators
          • Netscape suite
16
Lock-in and
        Complementary Products
     • Visa and Amex:Visa gave away payment
       services to capture interest charges
     • Operating system and applications
     • Extra profits on complements makes primary
       market more competitive
     • Differential prices
     • BargainFinder, MusicMaker
       – Unique
       – Cycle length
17
Contractual Commitments


 •   Lifetime of durable equipment
 •   Complementary assets with different lifetimes
 •   Buyer side: try to synchronize
 •   Seller side: try pre-emptive renewal




18
Structuring Deal


 •   Be sensitive to budgets
 •   Open systems, copyright protection
 •   Multi-year contracts with large customers
 •   Makes it hard to get scale to compete




19
New Versions and Upgrades


 • Don't want to leave opportunities open
 • Pre-announcements, vaporware
 • Avoid charges of predation




20
Lessons

  • Buyers
     – Bargain hard
     – Use second-sourcing and open systems
     – Improve bargaining position at choice stage
  • Sellers
     – Invest in your installed base
     – Cultivate influential buyers
     – Design product and pricing to get customers to invest in
       your technology
     – Sell your customers complementary products
21
     – Sell access to your installed base
Merci bien
     ありがとう
     Matur Nuwun
     Hatur Nuhun
     Obrigado
     Dank
     Thanks
     Matur se Kelangkong
     Syukron
     Kheili Mamnun
     ευχαριστίες
     Danke
     Grazias
     谢谢
     Terima Kasih
22

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Managing Lock in

  • 1. EKONOMI INFORMASI Managing Lock-In Mohamad Ariefiandi Nugraha : 23511028 Samsun H : 23511103 Kadek Suar Wibawa : 23511087 1
  • 2. Apa itu Lock In? Suatu kondisi dimana konsumer tergantung kepada suatu produk atau layanan dari satu vendor, sehingga bila konsumer akan beralih ke vendor lain akan diperlukan biaya yang besar dan ketidaknyamanan 2
  • 3. Keuntungan Lock In Buyer • mendapatkan layanan yang lebih dari produsen dengan harga yang lebih rendah • memiliki pilihan untuk beralih dari satu produk ke produk lain dengan switching-cost yang rendah bahkan bisa tanpa switching –cost dikarenakan para produses berkompetisi menekan biaya switching-cost Seller • mendapatkan kesempatan keberlanjutan bisnis dengan konsumen yang selalu setia 3
  • 4. Tug of War Between Buyers & Sellers • Sellers Hope to profit from locked-in buyers. 4
  • 5. Tug of War Between Buyers & Sellers • Buyers Seek to strengthen bargaining position by keeping their options open 5
  • 6. Lock Strategy for Buyer Brand selection Lock In Sampling Entrenc hment 6
  • 7. Strategy for Buyer • Menawar pada awal proses lock-in • Membatasi ketergantungan: – Dual sourcing – Permintaan kompensasi pada setiap step • Melakukan parsial kontrak – Kemungkinan untuk penurunan kualitas produk 7
  • 8. Lock Strategy for Seller Invest Entrenchment Leverage 8
  • 9. Investing in an Installed Base Customers • Perhatikan lock-in cycle • Selalu mencari pelanggan baru • Rencanakan kerjasama seumur hidup • Mengembangkan produk dan layanan • Menerapkan Multiplayer Strategies • Dapatkan customer yang berpengaruh 9
  • 10. Encouraging Customer Entrenchment • Entrenchment by Design. • Loyalty Programs & Cumulative Discounts 10
  • 11. Laveraging Your Installed Base • Menjual Produk Tambahan • Menjual Akses Terhadap Konsumen • Menyediakan Beberapa Versi Harga • Meminimalkan Search Cost terhadap produk kita. • Memanfaatkan Keuntungan menjadi First- Mover • Mengontrol Cycle Length 11
  • 12. Strategy for Sellers • Design products and promotions to attract customers • Lengthen and strengthen cycle • Sell complementary products to these consumers • Tension: claim openness, but don’t deliver – Example: simple open interface (RTF), powerful closed interface (DOC) 12
  • 13. Basic Tension in Buyer’s Strategy • Say you have large switching costs to get large compensation • But want to minimize lock-in as much as possible 13
  • 14. Strategic Variables in Lock-in Cycle • Magnitude of switch costs • Loyalty programs • Cumulative volume discounts • Rely on infotech – Loyalty programs will become more widespread – Convert conventional markets to lock-in markets 14
  • 15. Loyalty Programs • Requirements contracts • Frequent buyer program • Tension with promotions -- offer better deal to non-customers • Burden of locked-in customers: offer too high a price to attract new customers – Price discrimination, stripped down product • Consumer switch costs – Will go down due to Internet 15
  • 16. Multiplayer strategies • Decision maker and payer – Frequent flyer miles – Infant formulas at hospitals – Automobile tires • Buyers of complements – Different customers buy razors and blades – Subsidize the far-sighted group, tax the short- sighted group • BBS operators • Netscape suite 16
  • 17. Lock-in and Complementary Products • Visa and Amex:Visa gave away payment services to capture interest charges • Operating system and applications • Extra profits on complements makes primary market more competitive • Differential prices • BargainFinder, MusicMaker – Unique – Cycle length 17
  • 18. Contractual Commitments • Lifetime of durable equipment • Complementary assets with different lifetimes • Buyer side: try to synchronize • Seller side: try pre-emptive renewal 18
  • 19. Structuring Deal • Be sensitive to budgets • Open systems, copyright protection • Multi-year contracts with large customers • Makes it hard to get scale to compete 19
  • 20. New Versions and Upgrades • Don't want to leave opportunities open • Pre-announcements, vaporware • Avoid charges of predation 20
  • 21. Lessons • Buyers – Bargain hard – Use second-sourcing and open systems – Improve bargaining position at choice stage • Sellers – Invest in your installed base – Cultivate influential buyers – Design product and pricing to get customers to invest in your technology – Sell your customers complementary products 21 – Sell access to your installed base
  • 22. Merci bien ありがとう Matur Nuwun Hatur Nuhun Obrigado Dank Thanks Matur se Kelangkong Syukron Kheili Mamnun ευχαριστίες Danke Grazias 谢谢 Terima Kasih 22