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10.3 A Lock-In Index

We have developed a set of questions that can be used to measure lock-in. It can be viewed as a lock-in index. Try to think of a product or service and then answer the following questions:

  • The people who use this product are very cool. Add 1 point.
  • This product has a strong brand. Add 2 points.
  • The product or service is relatively expensive and was recently purchased. Add 1 plus 1 point for each time you use the word very.
  • The replacement parts for the product are relatively expensive. Add 2 points.
  • There is a service contract. Add 1 point for each year.
  • There is a significant learning curve for using the product effectively. Add 1 plus 1 point for each time you use the word very.
  • This product is a social networking application or has social networking features. Add 3 points.

If the score for the product or service is above 9, then this is a product or service with significant switching costs and lock-in. If the score is between 6 and 9, then the lock-in is moderately strong. If the score is between 3 and 6, then the lock-in is average. And if the score is 3, then the lock-in is minimal. If the score is zero, then you are probably buying an off-brand candy bar.

There are some products where the lock-in is transitory. Consider the fashion and clothing industry where the lead designers develop an anchor for next year’s fashion.Raustiala and Sprigman (2006). The premier lines typically develop seasonal themes for the fashion community. Everyone copies the anchored themes including the fashion leaders with their slightly scaled-back bridge lines (e.g., Gap Inc. represented by Banana Republic, the Gap and Old Navy and the Armani Group represented by Giorgio Armani, Armani Collezioni, and Emporio Armani). Copying is actually beneficial to the fashion industry. Copying an emerging fashion concept helps to standardize the design for a year or two until the design becomes obsolete. Some level of standardization is essential or chaos would ensue and costs would skyrocket because the supply chain would never stabilize. Nevertheless, the fashion themes are extremely transitory because, in a very short time, a new theme emerges and the old theme is out-of style.