Key Areas of Research
Transforming Products into Platforms: Unearthing New Avenues for Business Innovation
NIM Marketing Intelligence Review, October 2024
It is impossible for brands to ignore digital platform opportunities. Network effects are one of the strongest sources of power and defensibility ever invented and underlie some of the most valuable businesses in the world. Managers and entrepreneurs can leverage the power of platforms by adding some platform elements to their existing products or services, by distributing their brands via existing platforms or by developing their own new platforms. By using one’s own brands as platforms requires creativity but can help businesses unlock new value and build resilient ecosystems around their products. There are three key methods. The first is to invite third-party sellers to enhance existing products. Examples include selling advertising space around products or creating app stores to extend offers. The second is to connect one’s customers by enabling interactions among users to add value. Third, brands might reach out to customers’ customers by enhancing the end-user experience in a way that benefits both themselves and their direct customers. If thoughtfully implemented, any platform strategy will create self-reinforcing feedback loops sparking growth and keeping competitors at bay.
Andrei Hagiu, Associate Professor of Information System, Boston University; Bobby Zhou, Associate Professor of Marketing, University of Maryland
Liability of Foreignness in Immersive Technologies: Evidence from Extended Reality Innovations
Journal of International Business Studies
This study investigates the persistence of the Liability of Foreignness (LOF) in the realm of immersive technologies like Extended Reality (XR), which includes Augmented Reality (AR) and Virtual Reality (VR). Challenging the assumption that digitalization eliminates traditional barriers for foreign firms, we argue that LOF in XR stems from foreign companies' difficulties in providing a "mentally fluent" experience to consumers in foreign markets. Cultural mismatches can disrupt smooth information processing and diminish the effectiveness of XR innovations. Our research identifies specific XR technological features—realism, interactivity, and vividness—and brand-related factors like brand newness and platform orientation that can either exacerbate or mitigate LOF. Confirming the existence of LOF in XR innovations, we find that foreign brands in the South Korean beauty market are at a disadvantage in generating positive brand engagement through XR compared to local brands. XR innovations that are less realistic, more interactive, and highly vivid tend to amplify LOF due to the need for deeper cultural understanding. Conversely, higher realism in XR experiences helps reduce LOF by offering universally relatable content. Newer foreign brands and those using communication-centered platforms experience less LOF, as consumers may overlook cultural mismatches to resolve information uncertainty and develop attitudinal loyalty.
Hyoryung Nam, Assistant Professor, Martin J. Whitman School of Management at Syracuse University (Ph.d. from Smith – Marketing Department), Yiling Li, Doctoral Student, Yonsei Business School, Yonsei University, Seoul, Korea, P.K. Kannan, Dean’s Chair in Marketing Science, Robert H. Smith School of Business, University of Maryland, Jeonghye Choi, Professor of Marketing, Yonsei Business School, Yonsei University, Seoul, Korea