Smartphone Information Cascade
http://www.digitaltrends.com/mobile/iphone-7-sales-great-britain-us/
This article discusses the varying levels of success that the companies Apple and Samsung have experienced in the past few months. With the release of the iPhone 7, Apple faced an initial period of rapid increase in sales, especially in the United States and United Kingdom. Samsung, on the other hand, has not been as successful, and has seen a significant decline in their sales.
Many factors contributed to the difference in success between these two companies because individual consumers have different reasons for preferring one product over another. As discussed in class, when making a decision about a purchase, people tend to decide based on the information they learn about the product and the direct benefits that the product provides. It is somewhat easy to predict what consumers will purchase if their choice is determined solely by the benefits that the product offers. For instance, individuals looking for a phone with a bigger screen would probably be more inclined to favor the iPhone 7, as that was one of the most notable changes in Apple’s design.
The more complicated aspect of predicting consumer behavior is determined by the effect of information cascades and what information people learn about different products. One interesting topic that the article discussed was how a small piece of negative information about a product can be blown out of proportion and seriously damage a company. The example given in this article was the recall of the Note 7, Samsung’s “bendable” smartphone. When making a purchase, consumers will most likely have heard that Samsung had a recall on one of their smartphones, but they might not be able to remember exactly which model of phone it was. As a result, they might opt to purchase an Apple iPhone over a Samsung Galaxy S7 or S7 Edge because they don’t want to take the risk of purchasing a malfunctioning phone. This demonstrates how information spreads about new technology and how it influences consumer purchasing decisions.