Consumer Valuation of Modularly Upgradeable Products

Abstract

A lthough 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.

Product Modularity, Process Modularity, and New Product Introduction Performance: Does Complexity Matter?

“…, Ülkü et al. ) and can be brought up‐to‐date without significant cost. But, it is unclear how this will affect for instance the frequency of product introduction.…”

I can’t steal from a coworker if I work from home: Conceptual and measurement-related issues associated with studying counterproductive work behavior in a telework setting

“…The sample was recruited through Amazon.com's Mechanical Turk (MTurk) online subject pool where "requesters" (in our case, researchers) recruit "workers" (in our case, research participants) for the completion of "human intelligence tasks" (in our case, surveys) in exchange for wages. MTurk has become an accepted and popular recruitment tool among social scientists (e.g., Polman & Russo, 2012;Senecal, Wang, Thompson, & Kable, 2012;Skarlicki & Turner, 2014;Ulku, Dimofte, & Schmidt, 2012;West, Meserve, & Stanovich, 2012), and research suggests that scale reliability and in general psychometric properties are as good or better when scales are administered on MTurk as when they are administered via traditional methods (e.g., Behrend, Sharek, Meade, & Wiebe, 2011;Buhrmester, Kwang, & Gosling, 2011;Paolacci, Chandler, & Ipeirotis, 2010). In addition, a recent study examining the demographics of MTurk workers in the United States (Huff, 2014) demonstrated that the distribution of workers across industry is very similar to that of the distribution of the general U.S. population.…”

Modularization strategy: analysis of published articles on production and operations management (1999 to 2013)

“…Other study revealed significant results regarding the acceptance of upgradeable products by customers [23]. Product update viability must be analyzed in greater depth by researchers and managers.…”

“…A process module, in turn, [3,4] Modularity Approaches related to the partitioning of the modularization strategy [5,21] Modular architecture The structure in which the functional components of the product are arranged into physical parts and how interactions occur among the parts through interfaces [18,22,23] Module A functional unit with standardized interfaces that can be combined to compose products [17,23] Interfaces Connections that allow interconnection, adjustment, and communication of the modules [3,24] Source: prepared by the authors based on published studies includes standardized and indivisible activities of the process [21]. Modularity in services can be defined as a way of using resources in a flexible manner.…”