ESOC 316 Mindmeister Mind Map: Social Media & Market Economy "FREEMIUM"

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ESOC 316 Mindmeister Mind Map: Social Media & Market Economy "FREEMIUM" by Mind Map: ESOC 316 Mindmeister Mind Map: Social Media & Market Economy "FREEMIUM"

1. 1.) The term “lock-in” means that a certain product is dominant, because it gets the benefits of the growing returns to scale. As stated in our book, Information Rules, “the value of a locked-in customer as the sum of two components: that customer’s total switching costs plus the dollar value of your underlying competitive advantage based on product quality and cost”(p. 144).

2. 1.) The term “Network Economies” is described as an up and coming type of economic environment occurring from the digitization of rapid growing, devices/businesses and real-time connections amongst every day people. It refers to a businesses status, and by using what network economies has to offer allows for customers to benefit from what its offering.

3. 1.) Freemium:

3.1. 1.) The term "Freemium" is described as a pricing tactic where a product or service is free of charge, but then money is charged for exclusive features, virtual goods, and utilities. An example is when a company gives away part of a say software program, but then will charge for upgraded/better versions of that software program.

3.2. 2.) Freemium’s goal is to attract clientele by presenting free programs or versions of say software or businesses, but then later charges the customers for their products. As discussed in our week 7 readings/articles, as described by Chris Anderson, there are five ways to look at freemuim. Starting with Feature Limited, Time Limited, Capacity Limited, Seat Limited, and ending with Customer Class Limited.

4. 2.) Engagement:

4.1. 1.) The key word “engagement” along with the term data analysis helps to determine how web sites calculate the level of engagement it has with its viewers.

4.2. 2.) If one wanted to increase profits from a business standpoint, think to use customer engagement to increase freemium conversion and drive revenue. The goal of engagement with freemium business models is to attract multiple amounts of customers assuming that a number of them will in time pay for premium services.

5. 3.) Network Economy:

5.1. 2.) An example of a company using the concept of network economies would be Google Waze, an app created to allow drivers and transit systems to share real-time traffic and road information and alerts. This is not only useful to pretty much anyone who owns or uses some means of transportation, but can also help with the decrease of traffic and the decrease of transportation pollution.

6. 4.) Versioning:

6.1. 1.) Versioning is a type of business model where a company produces different representations of the same products, and then charges dissimilar costs for each manufactured good. The objective of versioning is that it allows for the customer to have two options, the ability to purchase a higher valued model for more money or a lower valued model for less money. The purpose of versioning for a business is to try and appeal to higher prices based on the value a customer considers/contains.

6.2. 2.) There are three primary methods when creating a versioned product. First is premium (higher quality, guaranteed access, faster, priority service, low deductibles/better coverage), second is stripped down (lower quality, more restrictions, off-peak, private label, unbundling, higher deductibles and lower benefits), and lastly meeting unique customers needs (package size, extended and enhanced warranties, bundling, different usage).

7. 5.) Lock-In:

7.1. 2.) In the past lock-in refers to the expenses of exchanging computer platforms, such as the process of Apple to PC. Now days, software is so commonly used that it’s become exchangeable. An example of this is the use of systems like Excel and Microsoft with the ability to operate smoothly on both PC and Apple.

8. 6.) Positive Feedback:

8.1. 1.) The concept of positive feedback in the market place is important. Positive feedback as described in our book, Information Rules, is organized around the concept of network. “Whether real or virtual, networks have a fundamental economic characteristic: the value of connecting to a network depends on the number of other people already connected to it” (174).

8.2. 2.) The positive feedback system follows a predictable pattern of an S-shaped curve with three phases: “Flat during launch, then a steep rise during takeoff as positive feedback kicks in, followed by leveling off as saturation is reached” (178). This system occurs almost every time positive feedback is involved with any business marketing approach.

9. 7.) Information Lifecycle:

9.1. 1.) Information Lifecycle is the idea of being able to explain how specific data is distributed, synthesized, created, accessed, stored, and made into products. There are three stages in the Information Lifecycle; the creation and acquisition of the data, the publication of the data, and the retention or removal of the data.

9.2. 2.) For a company to succeed it is crucial for them to be aware/able to create, store, and distribute information they are working with along with the exact software system before they get “locked-in.” The term Information Lifecycle is easily understood by how information is created and stored.