Consumer Skill and Competitive Advantage


As consumers gain product-specific skills they come to perceive the product differently and more favourably than inexperienced consumers. This is not only due to familiarity , emotional attachment, liking, trust, etc. Often, it is the result of an objective change in the utility of the product as a result of skill acquisition (Murray and H ubl, 2003). For example, when one has learned to drive a car it allows one to get around faster and more conveniently. As a result, the car is of much greater utility to a driver than it is to someone who has not learned to drive. Similarly, repeatedly shopping in an online store can reduce the time required to make a purchase. Consequently, to the extent that the consumer values his or her time, acquiring skill at using a Web site increases the utility of that Web site. As the utility of the Web site increases it is better and better able to satisfy the needs of the customer, and hence the subjective quality of the Web site should increase.

The human capital model (Ratchford, 2001) is receiving growing attention as evidence accumulates to suggest that a base of customers skilled in using one particular brand can provide a substantial competitive advantage to that brand - an advantage that has a direct effect on the probability of purchasing the brand (Johnson, Bellman and Lohse, 2003) and increasing the brand's market share (Shaprio and Varian, 1999). One of the most poignant examples of this phenomenon is evident in the development of the QWERTY keyboard. In 1873, E. Remington & Sons created the QWERTY keyboard because it allowed salesmen to illustrate the machine's speed by using only the top row of keys to type the brand name : Type Writer [1] . In the subsequent 130 years , many objectively superior keyboard layouts have been created. Notable among them is the Dvorak keyboard which according to a 1940s test by the U.S. Navy increased productivity so significantly, that the payback time to retrain a group of typists was only 10 days. (U.S. Navy Department, 1944; for an alternative account see Liebowitz and Margolis, 1990). Nevertheless, the QWERTY keyboard has remained the standard, with a dominant and unchallenged market share, because an installed user base has developed skills (human capital) specific to QWERTY.

The results of recent research provide further support for the central role that practice can play in preference formation. For example, Murray and H ubl (2003) have demonstrated that in learning to use a computer interface for online shopping the acquisition of non-transferable skills results in a strong preference for the incumbent interface (i.e., the interface that consumers were initially trained on) versus competing interfaces that the consumers were later exposed to. Their results are surprising in the context of economic models of search, which suggested that low search costs on the Internet would lead to a state of hyper-competition in which loyalty would rarely develop and consumers would have no real preference among alternative vendors (Bakos, 1997). However, when the models are revised to include the value consumers place on their time, and the time savings that result from the accumulation of human capital, it is less surprising that consumers would consistently choose products for which they have acquired relevant skills.

[1] An alternative, equally plausible but less interesting, account contends that the QWERTY keyboard layout is the result of the inefficient operation of the first machines. Layouts other than QWERTY resulted in the jamming of the type bars, so QWERTY was developed to intentionally slow the typist's speed down.




Contemporary Research in E-marketing (Vol. 1)
Agility and Discipline Made Easy: Practices from OpenUP and RUP
ISBN: B004V9MS42
EAN: 2147483647
Year: 2003
Pages: 164

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