Customized Bundling and Consumption Variety of Digital Information Goods

Author List: Bockstedt, Jesse C.; Goh, Kim Huat;
Journal of Management Information Systems, 2014, Volume 31, Issue 2, Page 105-132.
Customized bundling retail strategies have become increasingly popular online. In customized bundling, consumers decide the bundle’s components, and the effects of this change on consumption variety have important implications for information goods retailers. Although reduction in transaction and search costs increases supply-side product variety, customized bundling can introduce new types of friction in the consumption process. We show that customization of information good bundles reduces consumption variety through two effects: design cost effects and compromise effects. We present the results of three behavioral experiments and an empirical study using sales data from a national music retailer. This study contributes to the theoretical understanding of the effects of customized bundling on search costs and demand-side dynamics. The results provide insights for information goods retailers on the effects of design and search costs on consumer purchasing behavior. Implications for the design of retail platforms for customizable information goods are discussed.
Keywords: behavioral economics;bundling;content bundling;customization;e commerce;information goods;mass customization
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#285 0.201 effects effect research data studies empirical information literature different interaction analysis implications findings results important set large provide using paper
#118 0.169 online consumers consumer product purchase shopping e-commerce products commerce website electronic results study behavior experience b2c impact internet purchases websites
#13 0.165 personalization content personalized willingness web pay online likelihood information consumers cues customers consumer services elaboration preference experiment framing customized timing
#201 0.145 piracy goods digital property intellectual rights protection presence legal consumption music consumers enforcement publisher pirate producers policies copyright provision profits
#151 0.066 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#217 0.060 search information display engine results engines displays retrieval effectiveness relevant process ranking depth searching economics create functions incorporate low terms
#270 0.058 design designs science principles research designers supporting forms provide designing improving address case little space criteria methods increasing synthesis designer
#98 0.052 platform platforms dynamics ecosystem greater generation open ecosystems evolution two-sided technologies investigate generations migration services implications interplay disruptive control markets