Switching Inertia and Competitive Asymmetry: A Demand Side Perspective

36 Pages Posted: 17 Aug 2005

See all articles by Sali Li

Sali Li

University of Utah - David Eccles School of Business

Anoop Madhok

York University - Schulich School of Business

Gerhard Plaschka

DePaul University - Department of Management

Rohit Verma

Cornell University - School of Hotel Administration

Date Written: July 15, 2005

Abstract

This paper explores challenger strategy from a demand-side perspective. Departing from the traditional supply-side perspective, we highlight the significance of buyer switching inertia as an isolating mechanism affecting competitive heterogeneity and asymmetry across rivals and discuss its implications for designing and deploying challenger strategy. We suggest that by mapping buyers' needs and competitors' capabilities onto a value matrix, the challenger can make more informed decisions on how to compete with and outmaneuver an incumbent rival. With the assistance of discrete choice modeling, we empirically examine the competition between incumbents and challengers in the industrial automation industry. Our results support the existence of switching inertia and imply that challengers are better off by establishing unique strategic positions than by pursuing operational effectiveness.

Keywords: Switching inertia, competitive heterogeneity, competitive asymmetry, challenger strategy, discrete choice analysis, demand-side analysis

JEL Classification: D10, L10, M10, M30

Suggested Citation

Li, Sali and Madhok, Anoop and Plaschka, Gerhard and Verma, Rohit, Switching Inertia and Competitive Asymmetry: A Demand Side Perspective (July 15, 2005). Available at SSRN: https://ssrn.com/abstract=781064 or http://dx.doi.org/10.2139/ssrn.781064

Sali Li (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Anoop Madhok

York University - Schulich School of Business ( email )

470 Keele Street
Toronto, ON M3J 1P3
Canada
416-736-2100 x20578 (Phone)

HOME PAGE: http://research.schulich.yorku.ca/faculty-profile-details.jsp?id=87&tab=0

Gerhard Plaschka

DePaul University - Department of Management ( email )

1 E. Jackson Blvd.
Chicago, IL 60604
United States
312-362-8783 (Phone)
312-362-6973 (Fax)

Rohit Verma

Cornell University - School of Hotel Administration ( email )

435B Statler Hall
Ithaca, NY 14853-6902
United States

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