Lock in Effect is one debatable topic. Lock in Effect means the ways the service provider or a brand makes the customer bounded due to high switching costs. The terminology Lock in Effect actually belongs to economics, you must have heard of some one saying ‘this phone’s SIM is locked’ – that locked is actually part of Lock in Effect, most of the common user uses the partial terminology without actually knowing about Lock in Effect.
There is, however another Lock in Effect, that terminology belongs to Physics and originated from marine science.
What is Lock in Effect ?
We are discussing about Lock in Effect of Economics. The level of switching costs determine the extent of lock-in effect. Provider are able to bind with this effect in itself, which is also a tool for customer retention.
Strategies employed with Lock in Effect
There are companies that pursue a specific lock in Effect strategy in order to bind the customers to them : they deliberately and intentionally make switching difficult for the customers to another product. So initially they give advantages over the other competitors.
Consumers through financial investment in certain technologies or by temporal investments tied to a provider or a provider group. This often results in a vendor lock-in called vendor lock-in.
The general principle is that most lock in effects are caused by the customers themselves. It is their own preference which lead to product or vendor specific investments. Usually, this type of bond – even though self-inflicted – and perceived as alien to determine negative.
Typical examples of Lock in Effect
Safety razor blades : As said, this was the first Lock in effect that went widely successful. Gillette razor manufactured by Gillette who sold a patented blade holder, adapted to the safety disposable blades, which were cheap to produce and sell high-margin again to the owners of the blade holder.
Microsoft, Google and Apple : Several lawsuits has been formed against these companies for employing the Lock in Effect in the basis of antitrust action against a monopoly.
Mobile Phones : Lock in Effect is used both for the SIM card and the battery.
Cameras : Lock in Effect is used for the Lenses and battery.
Inkjet Printers : The cost of Printer is almost nothing, but the proprietary cartridges are modeled with Lock in Effect to fetch money.