Bundled Mobile Services: The Impact on Consumers’ Intention to Adopt Marije Teerling, Timber Haaker, Henny de Vos, Mirella Kleijnen HICSS 2009

Mobiles are increasingly used as a third screen Mobile seen as integrated communication device But! Mobile TV is taking off slowly Mobile internet usage is relatively low Current reality seems disappointing (Newell & Newell-Lemon, 2001) Hence: Need to move beyond technology push

Mobile service bundles Packaged set of mobile services, mobile device, (data) subscription, e-services for one price plan. Examples: Research Motivation: Adoption of mobile services is hampered by [..] mismatch between launched applications and everyday user needs (Carllson, 2006) Bundle may provide ‘bundle of benefits’ (Kotler, 1999)

Packaged set of mobile services, mobile device, (data) subscription, e-services for one price plan.

Examples:

Research Motivation:

Adoption of mobile services is hampered by [..] mismatch between launched applications and everyday user needs (Carllson, 2006)

Bundle may provide ‘bundle of benefits’ (Kotler, 1999)

What is a bundle? Focus on bundling from end-user perspective.. Bundling is the sale of two or more separate products or services in one package Separate product is one for which a separate market exists for end-users Separate markets for parts exist at other levels in the channel

Focus on bundling from end-user perspective..

Bundling is the sale of two or more separate products or services in one package

Separate product is one for which a separate market exists for end-users

Separate markets for parts exist at other levels in the channel

Forms of bundling Pure bundling is selling only the bundle and not (all) products separately Mixed bundling is selling both the bundle and the separate products Unbundling is only selling the products separately

Pure bundling is selling only the bundle and not (all) products separately

Mixed bundling is selling both the bundle and the separate products

Unbundling is only selling the products separately

Focus of bundling Service bundling is the integration and sale of two or more separate services Customer may benefit from discount price but also from added value from integration Provider may create added value and has possibility for differentiation Bundle compatibility is the level to which the individual services in the bundle enhance each other Customer may benefit more from services that complement each other

Service bundling is the integration and sale of two or more separate services

Customer may benefit from discount price but also from added value from integration

Provider may create added value and has possibility for differentiation

Bundle compatibility is the level to which the individual services in the bundle enhance each other

Customer may benefit more from services that complement each other

Objective Examine to what extent bundling contributes to the consumers’ adoption and value perceptions of m-services. Research questions: How does perceived m-service bundle compatibility impact the relationships in the value-intention framework? How do these relationships vary for current adopters versus non-adopters of m-services?

Examine to what extent bundling contributes to the consumers’ adoption and value perceptions of m-services.

Research questions:

How does perceived m-service bundle compatibility impact the relationships in the value-intention framework?

How do these relationships vary for current adopters versus non-adopters of m-services?

Conceptual Background Value – intention framework Value mediates between service quality and intention (Brady et al. 2005) Value-Based adoption Model (Kim et al., 2007) Conditional value Ubiquity increases importance of m-services (Pura 2005, Nysveen et al., 2005) M-service bundle compatibility Compatible services in a bundle may enhance overall value (Stremersch & Tellis, 2002) Not to be confused with service compatibility (Kleijnen et al., 2007)

Value – intention framework

Value mediates between service quality and intention (Brady et al. 2005)

Value-Based adoption Model (Kim et al., 2007)

Conditional value

Ubiquity increases importance of m-services (Pura 2005, Nysveen et al., 2005)

M-service bundle compatibility

Compatible services in a bundle may enhance overall value (Stremersch & Tellis, 2002)

Not to be confused with service compatibility (Kleijnen et al., 2007)

Theoretical Framework H1: Perceived total value is positively related to the intention to use m-services H2: Perceived hedonic and utilitarian value are positively related to the perceived total value of the m-services. H3: Perceived conditional value is positively related to the perceived hedonic and utilitarian value of the m-services. H4: The level of perceived m-service bundle compatibility strengthens the relationships between (H4a) hedonic value and total value and (H4b) utilitarian value and total value increases. Hedonic value Utilitarian value Conditional value Total value Intention M-service bundle compatibility

H1: Perceived total value is positively related to the intention to use m-services

H2: Perceived hedonic and utilitarian value are positively related to the perceived total value of the m-services.

H3: Perceived conditional value is positively related to the perceived hedonic and utilitarian value of the m-services.

H4: The level of perceived m-service bundle compatibility strengthens the relationships between (H4a) hedonic value and total value and (H4b) utilitarian value and total value increases.

2x2 experimental design Two types of service bundles Experience or hedonic oriented bundle Goal-directed or utilitarian oriented bundle Two types of consumer groups Current adopters of m-services Current non-adopters of m-services Research Design (1)

2x2 experimental design

Two types of service bundles

Experience or hedonic oriented bundle

Goal-directed or utilitarian oriented bundle

Two types of consumer groups

Current adopters of m-services

Current non-adopters of m-services

M-service bundles

Research Design (2) Questionnaire development based on Literature review Extensive pre-testing Data collection: Consumer panel Bundle assigned at random Sample 403 respondents, 245 adopters, 159 non-adopters

Questionnaire development based on

Literature review

Extensive pre-testing

Data collection:

Consumer panel

Bundle assigned at random

Sample

403 respondents,

245 adopters, 159 non-adopters

Analysis & Results (1) Gender 56% women 44% men Age <25: 6% 25 – 35: 19% 36-45: 25% 45-55: 25% >55: 25% Reliability & validity Cronbach’s alpha > .8 Average variance extracted > .65

Gender

56% women

44% men

Age

<25: 6%

25 – 35: 19%

36-45: 25%

45-55: 25%

>55: 25%

Reliability & validity

Cronbach’s alpha > .8

Average variance extracted > .65

Analysis & Results (2)

Analysis & Results (3)

Conclusions (1) Value  Intention Adopters show stronger relationship M-services compatibility strengthens value-intention relationship Non-adopters use the cue (bundle compatibility) as a means to reduce complexity. Adopters do not necessarily need the bundle to reduce cognitive efforts Utilitarian versus hedonic value Non-adopters: no strong differences  both types of value relevant Adopters: utilitarian value in general determines total value, hedonic value is strongly enhanced by high bundle compatibility

Value  Intention

Adopters show stronger relationship

M-services compatibility strengthens value-intention relationship

Non-adopters use the cue (bundle compatibility) as a means to reduce complexity.

Adopters do not necessarily need the bundle to reduce cognitive efforts

Utilitarian versus hedonic value

Non-adopters: no strong differences  both types of value relevant

Adopters: utilitarian value in general determines total value, hedonic value is strongly enhanced by high bundle compatibility

Conclusions (2) Conditional value increases total value indirectly through hedonic and utilitarian value. Similar for both groups Non-adopters are capable of perceiving this benefit before having actually used m-services. Adopters perceive a higher overall value for utilitarian m-services rather than for hedonic m-services.

Conditional value

increases total value indirectly through hedonic and utilitarian value.

Similar for both groups

Non-adopters are capable of perceiving this benefit before having actually used m-services.

Adopters perceive a higher overall value for utilitarian m-services rather than for hedonic m-services.

Limitations & Future research Laboratory setting results may have limited external validity Age distribution of the sample relatively ‘at age’ given the domain of m-services observed valuations did not differ significantly with age More insight into consumers’ perceived value and adoption of m-services which have high conditional value perhaps the greatest advantage of mobile commerce Are consumers really interested in obtaining m-services that are truly context aware?

Laboratory setting

results may have limited external validity

Age distribution of the sample

relatively ‘at age’ given the domain of m-services

observed valuations did not differ significantly with age

More insight into consumers’ perceived value and adoption of m-services which have high conditional value

perhaps the greatest advantage of mobile commerce

Are consumers really interested in obtaining m-services that are truly context aware?

Q