2003-04 ODS: Time-To-Value, Customer Learning, and the Development of High-Tech Breakthrough Products (Working Paper Abstract)
Chen, C., & Noori, H.
published: 2003 | Research publication | Working Paper - ODS
ABSTRACT: High-tech breakthrough products often have more complex built- in technology and functionality than their traditional counterparts. Since most customers do not have prior experience with such a product, they usually spend more significant time, money, and/or effort in learning its innovative capability in order to fully appreciate its value. In this paper, we develop a model to analyze the timing aspect of post-purchase customer learning and its impacts on the development of high-tech breakthrough products. We also use a mixedinfluence function inspired by psychological research and case studies to model the learning process undertaken by a customer. Our analysis shows that the amount of time a customer spends in learning has significant impacts on the success of a high-tech breakthrough product in today's marketplace where many customers are impatient or not technologically ready. A customer may terminate the learning process before the entire embedded value of the product is realized or even before her utility is maximized if she encounters early frustration due to learning difficulty or product complexity. To avoid such an unwanted consequence, a manufacturer should try to design a high-tech breakthrough product that is easy to learn without significantly sacrificing experience-based product features. Based on the analytical results, we discuss several useful guidelines and strategies that can be used to manage the development of high-tech breakthrough products.
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revised Dec 9/04
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