Feature Overload Kaifu Zhang, V' Padmanabhan

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Feature OverloadKaifu Zhang, V. Padmanabhan

• Discussed by
• Axel Stock
• University of Central Florida (UCF)

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A consumers perspective
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Recap An empirical result

• Rust et al. (2005), Thompson et al. (2006)
  document preference reversal of consumers
• Consumers prefer complex products before purchase
• Consumers prefer easy to use products post
  purchase
• Research Questions
• Why do consumers not purchase simple, easy to use
  products in the first place?
• Should firms offer more simple, easy to use
  products?
• Under what conditions should they offer complex
  products?

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This research

• Core Assumptions
• Consumers are uncertain about feature needs
• Consumers incur a cost of complexity
• Feature Rich Products have a
• Valuation Effect
• Market Segmentation Effect
• Studies the impact of these effects in a Monopoly
  as well as Duopoly Scenarios

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Comments

• Possibly consider only two products right from
  the start
• A simple, easy to use product
• A complex product with an additional feature
• Extension A segment of consumers (expert users)
  needs the complex product with certainty and
  incurs no complexity cost

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Effect of the Size of the Expert Users

• Conjectures
• An increase in the size of this segment will lead
  to greater sales of the complex product
• Interestingly, this could have positive or
  negative impacts on firms profits
• Positive effect equilibrium (b-b) is changed to
  (ab-b)
• Negative effect equilibrium (ab-b) is changed to
  (ab-ab)

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Implications

• Educating consumers to have needs for multiple
  features may not always be a good idea
• Similarly, companies may not want to eliminate
  the complexity cost of consumers

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Summary

• An interesting paper with a rich set of results
• Extensions have managerial focus
• Model captures observed phenomenon nicely
• Empirical results provide further support for the
  mechanisms demonstrated by the model