Consumer valuation of modularly upgradeable products / Sezer Ulku in Management science, Vol 58 N°9 (Septembre 2012)  

Public ISBD [article]  inManagement science > Vol 58 N°9 (Septembre 2012) . - pp.1761-1776 Titre : Consumer valuation of modularly upgradeable products Type de document : texte imprimé Auteurs : Sezer Ulku, Auteur ; Claudiu V. Dimofte, Auteur ; Glen M. Schmidt, Auteur Année de publication : 2012 Article en page(s) : pp.1761-1776 Note générale : Management Langues : Anglais (eng) Mots-clés : Product architecture Modularity upgrades replacement Pricing Temporal construal Hyperbolic discounting Resource slack Résumé : Although product modularity is often advocated as a design strategy in the operations management literature, little is known about how consumers respond to modular products. In this research we undertake several experiments to explore consumer response to modularly upgradeable products in settings featuring technological change. We consider both the initial product choice (between a modularly upgradeable product and an integral one) and the subsequent upgrade decision (replacement of a module versus full product replacement). First, we show that consumers tend to discount the cost savings associated with modular upgrades excessively (insufficiently) when the time between the initial purchase and the upgrade is short (long). This suggests that modular upgradability as a product feature has higher profit potential for slowly rather than rapidly improving products. Second, we observe a preference reversal between the initial purchase and the point of upgrade: At the point of initial purchase, people foresee making a full product replacement in the future, yet, when faced with the actual upgrade decision, they are more likely to revert to modular upgrades. Finally, we discuss and test several pricing and product design strategies that the firm can use to respond to these cognitive biases. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/early/2012/04/27/mnsc.1120.1519.abstra [...] [article] Consumer valuation of modularly upgradeable products [texte imprimé] / Sezer Ulku, Auteur ; Claudiu V. Dimofte, Auteur ; Glen M. Schmidt, Auteur . - 2012 . - pp.1761-1776. Management Langues : Anglais (eng) in Management science > Vol 58 N°9 (Septembre 2012) . - pp.1761-1776 Mots-clés : Product architecture Modularity upgrades replacement Pricing Temporal construal Hyperbolic discounting Resource slack Résumé : Although product modularity is often advocated as a design strategy in the operations management literature, little is known about how consumers respond to modular products. In this research we undertake several experiments to explore consumer response to modularly upgradeable products in settings featuring technological change. We consider both the initial product choice (between a modularly upgradeable product and an integral one) and the subsequent upgrade decision (replacement of a module versus full product replacement). First, we show that consumers tend to discount the cost savings associated with modular upgrades excessively (insufficiently) when the time between the initial purchase and the upgrade is short (long). This suggests that modular upgradability as a product feature has higher profit potential for slowly rather than rapidly improving products. Second, we observe a preference reversal between the initial purchase and the point of upgrade: At the point of initial purchase, people foresee making a full product replacement in the future, yet, when faced with the actual upgrade decision, they are more likely to revert to modular upgrades. Finally, we discuss and test several pricing and product design strategies that the firm can use to respond to these cognitive biases. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/early/2012/04/27/mnsc.1120.1519.abstra [...]

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