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CDPSG4 [PR] Ch1 – Today&Ch2–Network Effect, A84EF3AB-E65B-4440-9009…
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A two-sided market (with both producers and consumers) gives rise to four kinds of network effects: same-side effects
(positive and negative) and cross-side effects (positive and negative). A growing platform business must manage all four
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Producers and Consumers interact, exchanging feedback through facilities
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Price effects: can be an important analysis for businesses in setting the offering price of their goods and services. In general, when prices rise, buyers will typically buy less and vice versa when prices fall
eg.discounting and couponing
Network Effects
Create the virtuous cycle which leads to the building of a longlasting
network of users - Lock In Effect
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Brand effects: If a customer sees the brand as signifying quality or exclusiveness, then they will expect to pay more than the market average. If they recognize the brand but have no strong view of it, they will expect to pay around market average. If they do not know the brand at all, they will expect to pay below market average.
eg. fans
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