Product Competition
Use this calculator to explore the startup of a new company or the adoption of a product in a competitive market. This calculator models the competition between two products and the impact of network effects that make products more attractive as they gain users. Examples of the impact of network effects include social networks (e.g. Facebook vs MySpace) and the videotape war (e.g. Betamax vs VHS).
Three factors are supported when modeling whether a potential user chooses your product or a competitor's:
- Quality: Which product is innately better (more features, more stable, easier to use, etc...).
- Marketing: Marketing or price differentials that may make one product more attractive than the other.
- Network Effects: The effect that a larger user base has on increasing the attractiveness of a product.
For each of these factors you can rate how important they are to the adoption of the product. As new users decide to adopt a product, they may choose between you and your competitor based on these factors. Users may also choose to switch between products at a rate that reflects the switching costs or "stickiness" of the products.
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