Consumer Inferences About Hybrid Goods and Services From Pricing and Innovation

Nita Umashankar, University of Texas, Austin
Raji Srinivasan, University of Texas, Austin
We examine how risk aversion and reliability uncertainty affect the influence of pricing and innovativeness on inferences about hybrid goods and services. Findings reveal that consumer inferences about hybrid products, those containing both goods and service elements, stem from the intangibility and experiential nature of the service component. Based on the attributes of services, consumers draw inferences about the price of each component to mitigate the uncertainty associated with assessing service quality. Further, they feel less uncertain about innovation related to the tangible goods element of the hybrid. The first study shows that when both components are set at a price distinct from one another, pricing the service higher than the good has stronger effect on offering desirability. The second study shows that consumers prefer hybrid products where the locus of innovation is on the good and not the service, suggesting that inferences are made concerning component innovation risk and reduction in reliability uncertainty is desired.
[ to cite ]:
Nita Umashankar and Raji Srinivasan (2008) ,"Consumer Inferences About Hybrid Goods and Services From Pricing and Innovation", in NA - Advances in Consumer Research Volume 35, eds. Angela Y. Lee and Dilip Soman, Duluth, MN : Association for Consumer Research, Pages: 1038-1038.