Switching Inertia and Competitive Asymmetry : A Demand Side Perspective

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