Decommoditization, Resonance Marketing, and Information Technology: An Empirical Study of Air Travel Services amid Channel Conflict

  • Authors:

  • Nelson Granados;Robert Kauffman;Hsiangchu Lai;Huang-Chi Lin

  • Affiliations:

  • Graziadio School of Business and Management, Pepperdine University;School of Information and the Lee Kong Chian School of Business, Singapore University;College of Management, National Sun Yat-Sen University, Kaohsiung, Taiwan;College of Management, National Sun Yat-Sen University, Kaohsiung, Taiwan

  • Venue:
  • Journal of Management Information Systems
  • Year:
  • 2011

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Abstract

Digital intermediaries and Internet search technologies have commoditized many products, resulting in intense price competition and channel conflict. Firms use decommoditization strategies to regain control over distribution channels, as well as to implement resonance marketing and hyperdifferentiation, which allows them to improve margins through differentiation. We test two hypotheses: the decommoditization hypothesis and the resonance marketing hypothesis. We use data from an airline with a new íï戮驴 la carte pricing mechanism, which allows consumers to tailor airline ticket bundles to suit their individual preferences. We compare íï戮驴 la carte ticket pricing, whose features can be modified by the purchaser, and fixed (bundled offer) sales, which cannot be modified. We found that a significant number of travelers do use íï戮驴 la carte pricing, which allows the airlines to regain some control over distribution. We find that travelers customized standard bundles when it was possible for them to make íï戮驴 la carte ticket bookings, but mainly for low-feature standard bundles. Frequent-flyer members purchased higher-feature bundles more often when they had the opportunity. The findings support the proposed hypotheses. We discuss the implications for distribution strategy and channel conflict management.