The Effect of Customer Preferences Dynamism on Incumbent Firms : The Case of Nokia in the Mobile Phone Industry

Abstract: ABSTRACTTitle: The Effect of Customer Preferences Dynamism on Incumbent Firms:The Case of Nokia in the Mobile Phone industry.Authors: Adnan Kandeel [email protected] Sali [email protected]: Department of Management and EngineeringDate: 27th of May 2013Background: The study of the dynamism of customer preferences’ effect onincumbent firms offers in-depth understanding of the active roleof customers in affecting the position of incumbent firmswhich has been neglected in the vast majority of literaturethat examined the declining position of incumbent firms.Aim: The aim of this thesis is to examine the dynamism of customerpreferences’ effect on incumbent firms.Definitions: Incumbent firm: the dominant firm in an industry.Customer preferences: the collection of attributes including explicitand implicit attributes of a certain product.Preference stereotypes: the implicit prejudgement by customers about a certain product that can not be ascribed to an explicit attribute.Methodology: A qualitative approach where online historical data from 1100 NokiaMobile phone user reviews for 11 years were collected, profiled, andthen analyzed.Completion and results: Incumbent firms are affected by the dynamism of explicit andimplicit preferences through their effect on radical and incrementalinnovation. Furthermore, preference stereotypes can affect incumbentfirms’ ability to impact the change of product meanings throughradical innovation and investment in technology.Keywords: Incumbent firms, Customer preferences dynamism, Radical innovation