A study of the impacts of customization on consumer behavior, preferences, and willingness to pay

Abstract

With the growing importance of eCommerce and its influence on consumer preferences, companies have created value for consumers by offering online customization of their products. Traditional economic theory poses that consumers gain utility from the functional benefits of goods and services. This paper investigates the concept of non-functional utility, in the frame of product customization. The authors test if the act of customizing a product creates additional value for the consumer when the customization does not add functional utility to the product. This was measured in two different ways, through a trivial and non-functional customization of a mug, and non-functional customization of a premium automotive vehicle online, to simulate real-world consumer choice behavior. Utility was quantified by the effects on willingness to pay, after nonfunctional changes were made. The purpose of this study is to uncover new ways companies can serve their customers and create the most value in their products and increase firm profits.