Consumer Reactions to On-demand Features: An Empirical Study in an Automotive Context

Florian Vogt

Student thesis: Master thesis

Abstract

The widespread introduction of digital technologies and the facilitated access to the internet have significantly changed the consumption behavior of modern-day customers. Customers increasingly seek more individual consumption experiences and look for new ways to tailor a product exactly to their needs. In response to that trend, so-called on-demand features offer the possibility to extend the functionality of a product, even after the initial purchase has been made. They allow customers to digitally access or unlock certain functions of a product for a limited period of time in exchange for an additional fee and, thereby, react to a temporary change in their needs and adapt the existing product accordingly. However, since on-demand features are still a relatively new concept and the implementation of this concept into a variety of products is still at an early stage, research in business academia is scarce.
Therefore, this master’s thesis aims at investigating how customers react to on-demand features and to what extent their perceptions are mediated by fairness considerations. In particular, it is examined how the tangibility (tangible vs. intangible),as well as the pricing structure (flat fee vs. pay-per-use), of an on-demand feature influences the customers’ purchase intention. An overview of the relevant concepts and literature is provided to set the theoretical foundation for this thesis. The empirical research is based on a self-completion online questionnaire with two integrated scenario-based experiments. For those experiments, an automotive context was chosen. It was found that the relationship between an on-demand feature’s tangibility and the customers’ purchase intention is mediated by fairness perception, such as an intangible on-demand feature is perceived as fairer than a tangible one and that increased fairness perception leads to a higher purchase intention. For the relationship between an on-demand feature’s pricing structure and the customers’ purchase intention, however, the mediating role of fairness perception could not be ascertained.
Overall, the results from the two studies conducted in the course of this thesis indicate that, in general, customers appreciate fairness as they exhibit a significantly higher purchase intention towards products that they perceive as fair. However, since this study is among the first that empirically examines the concept of on-demand features, additional studies in different contexts and with different features are needed to further research the customer’s reaction to on-demand features.

EducationsCand.merc. Customer and Commercial Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages130
SupervisorsTobias Schäfers