Customized Bundling and Consumption Variety of Digital Information Goods

Jesse C Bockstedt, Kim Huat Goh

Research output: Contribution to journalArticle

7 Scopus citations

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 languageEnglish (US)
Pages (from-to)105-132
Number of pages28
JournalJournal of Management Information Systems
Volume31
Issue number2
DOIs
StatePublished - Oct 1 2014

Keywords

  • behavioral economics
  • bundling
  • content bundling
  • customization
  • e-commerce
  • information goods
  • mass customization

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems and Management
  • Management Science and Operations Research
  • Computer Science Applications

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