GE and The Value Destruction That Comes With Digitization.

GE and The Value Destruction That Comes With Digitization.



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Digital Goods Are Less Valued Than Physical Goods

In their research on customer perceptions of physical vs digital goods, Ozgun Atasoy (Postdoctoral research associate at Basel University) and Carey K. Morewedge (Professor of Marketing at Boston University) suggest that

‘in five experiments, people ascribed less value to digital than to physical versions of the same good…even though digital goods are, in many cases, substantive innovations relative to their physical counterparts’

In experiments run by the authors, tourists were unwilling to pay more for a digital copy of a holiday picture than for a physical version of the same picture. Even though the digital picture could be shared, was perceived to be of higher quality and would degrade less quickly than the physical version. The conclusion is that, for the consumer, there is a greater sense of psychological ownership with the physical product. 

...The expertise that the current employees, who are experts in this industry, bring to the table will be invaluable to companies that are causing the digital disruption. As competitors move into the space there will be a need to understand the underlying levers and drivers of the industry, to disrupt a thing you have to understand it thoroughly. ...