Abstract
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.
Original language | English (US) |
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Pages (from-to) | 105-132 |
Number of pages | 28 |
Journal | Journal of Management Information Systems |
Volume | 31 |
Issue number | 2 |
DOIs | |
State | Published - Oct 1 2014 |
Externally published | Yes |
Keywords
- behavioral economics
- bundling
- content bundling
- customization
- e-commerce
- information goods
- mass customization
ASJC Scopus subject areas
- Management Information Systems
- Computer Science Applications
- Management Science and Operations Research
- Information Systems and Management