Marketing Modularly Upgradable Platforms

• Applicant: Dr. Nico Wiegand
• Subject Area: Accounting and Finance
• Term: from 2017 to 2019
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 390850382

The Initiative aims to shed light on consumers' valuation of modularly upgradable products (e.g., automobiles, consumer electronics) compared to their integral counterparts. The advancing "platformization", i.e. the addition of software components to formerly integral products, paves the way for product improvements through "over-the-air" upgrades after purchase. Some manufacturers have even begun to include hardware components in their products whose usage is only rendered possible by the respectively priced software upgrade. This development will be accelerated by the advent of the Internet-of-Things. So far not much is known about the consumer valuation of such upgrades and their willingness-to-pay for them. Moreover, it is unclear how introducing a platform prematurely, i.e. without the desired software quality and thus hardware functionality, affects consumer adoption. The project thus asks the following questions:- Do consumers value modularly upgradeable products over integral ones? - How do upgrade timing and upgrade scope impact willingness-to-pay? Is there an interaction between timing, scope, and initial product setup at market introduction? - What role does uncertainty about upgrade timing and scope play?- Does consumer valuation of upgradeable products differ according to the type of upgrade (hedonic vs. utilitarian functions)?- What strategies should firms apply to introduce modularly upgradeable products?A series of studies aims at uncovering decision heuristics and biases applied by consumers when evaluating upgradeable products. Ultimately, we derive strategies to better introduce innovative platforms to the market and service them during their product lifecycle.

• DFG Programme: Research Grants
• Co-Investigator: Professorin Dr. Monika Imschloß
• Cooperation Partner: Maximilian Bader