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

• Main Authors: GRANADOS, N. F., Kauffman, Robert J., Lai, H. C., Lin, H. C.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: air travel services; à la carte pricing; channel conflict; commoditization; decommoditization; disintermediation; information transparency; intermediaries; reintermediation; resonance marketing; Computer Sciences; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/sis_research/2187; http://dx.doi.org/10.2753/MIS0742-1222280203
• Institution: Singapore Management University

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 í﾿ la carte pricing mechanism, which allows consumers to tailor airline ticket bundles to suit their individual preferences. We compare í﾿ 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 í﾿ 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 í﾿ 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.