jin k. han, seh woong chung, & yong seok sohn technology ...98 / journal of marketing, july 2009...

97Journal of MarketingVol. 73 (July 2009), 97–108

© 2009, American Marketing AssociationISSN: 0022-2429 (print), 1547-7185 (electronic)

Jin K. Han, Seh Woong Chung, & Yong Seok Sohn

Technology Convergence:When DoConsumers Prefer Converged

Products to Dedicated Products?In today’s marketplace, many of the newer-generation convergence products (e.g., camera phones, all-in-onepersonal digital assistants) offer consumers product performance that rivals dedicated versions. With the increasedavailability of options, consumers now face another dilemma in their purchase consideration: Which product formshould they choose—converged, dedicated, or both? This study investigates the choice patterns for product formsalong the technology trajectories. In a series of four studies, the authors find that at low levels of technologicalperformance, consumers overwhelmingly select convergence products over the dedicated options, whereas thechoice pattern is reversed at high levels of technological performance. Furthermore, the authors demonstrate thata preannouncement of future technology can affect consumer preferences for product forms. Finally, they address the managerial implications and suggest directions for further research.

Keywords: digital convergence, technology trajectory, intercategory choice, product bundling, dilution effect

Jin K. Han is Associate Professor of Marketing (e-mail: [email protected]), and Seh Woong Chung is Assistant Professor of Marketing Practice(e-mail: [email protected]), LKC School of Business, SingaporeManagement University. Yong Seok Sohn is Professor of Marketing,School of Business, Kyung Hee University (e-mail: [email protected]).Theauthors acknowledge the generous support of the Wharton–SingaporeManagement University Research Centre and the Kyung Hee UniversityResearch Center, as well as the helpful comments from Gangseog Ryu,the participants of the Singapore Marketing Research Roundtable, andthe anonymous JM reviewers.

1The Consumer Electronic Association defines “anywhere tech-nologies” to include digital cameras, camcorders, portable audio,portable communications, and electronic gaming products.

In recent years, technological advancements in consumerelectronics have transformed consumer portable devicesfrom mere gadgetry into ubiquitous lifestyle products

(Gerson 2007). Reflecting this trend, the Consumer Elec-tronic Association estimates that the category sales of “any-where technologies” accounted for one-third of the $160billion U.S. consumer electronics market in 2007–2008 andforesees continued growth for the next few years (Gerson2007).1 Not surprisingly, high-tech products, such as mobilephones, digital cameras, and MP3 players, have arguablybecome “consumer essentials” in this day and age, withmore items in line to join the ranks. However, the dilemmasoon becomes evident as the sheer number of high-techproducts a modern-day consumer must manage quicklyreaches unwieldy levels. To this end, firms have been turn-ing their attention to the “convergence” notion as a seem-ingly logical product solution (The Economist 2005). Sim-ply put, a convergence product is a digital-platform product

bundle that physically integrates two or more digital-platform technologies into a common product form (e.g., amobile phone and a digital camera into a camera phone).

On the supply side, several convergence productsalready offer consumers a legitimate alternative to dedi-cated product forms across a wide range of technology cate-gories, for example, Apple’s iPhone (mobile phone + MP3player), Sony’s PSP (game console + media player), andSamsung’s Miniket (camcorder + digital camera + MP3player + voice recorder). Nonetheless, the demand-sideimpact of the convergence strategy remains relatively unex-plored in the academic literature to date. In particular, howdoes the introduction of a convergence product affect con-sumer preferences for the corresponding dedicated productoptions? As convergence products evolve up the technologytrajectory, how stable are the product-form preferences? Tobetter understand the underlying intercategory dynamicsbetween converged and dedicated products, this studyexplores how consumers react to the notion of convergenceat different stages in the technology trajectory.

Specifically, Study 1 investigates the demand-sideperspective with a closer examination of the product-form choice patterns. We propose Christensen’s (2000)buying-hierarchy framework (consisting of performanceand convenience dimensions) to predict product-formchoices at different levels of technology. Furthermore,Study 2 examines choice implications for consumers whoform technological expectations on the basis of the prean-nouncement. In Study 3, we extend Study 1’s results acrossdifferent product-category combinations. Study 4 addressesa potential moderator that may attenuate the results in Stud-ies 1 and 3. Finally, we discuss the theoretical and manage-rial implications for technology trajectory and product-linemanagement.

98 / Journal of Marketing, July 2009

Convergence Products:Background and Definition

Although the wave of convergence products into the main-stream is seemingly a contemporary phenomenon, thenotion behind this product concept dates back to the tradi-tional bundling practices. Referred to as “productbundling,” manufacturers through the years have made vari-ous attempts to integrate different product categories—typi-cally, in the name of convenience or versatility (Stremerschand Tellis 2002). Notwithstanding its intuitive appeal, priorattempts at product bundling have been met with limitedsuccess. For example, the video phone that was supposed torevolutionize business and consumer communication endedup as a costly failure for AT&T (Schnaars and Wymbs2004), and the appeal of multifunction machines (printer,copier, scanner, and fax functions) never went beyond theniche segment of small-office/home-office customers (Kim,Han, and Srivastava 2002). The common denominator forthe lackluster attempts was that consumers typically found“all-in-one” products to be more or less “underperformingoctopus peripherals” (Crawford 2004, p. 59). Consequently,product bundling has remained largely a fringe productstrategy—that is, until recently. With advancements in keytechnologies, especially in the areas of component minia-turization and digital processors, the market for a new waveof product bundling is no longer limited to niche products(Chan 2004).

Thus, the convergence product represents a renewedapplication of product bundling in the digital domain, and itis one of the fastest-growing product categories in con-sumer technology (Reinhardt, Tashiro, and Elgin 2004).Although the increasing availability and popularity of con-vergence products are altering the consumer-technologylandscape, the extant research on product bundling or con-vergence remains rather scant. From both a theoretical anda managerial standpoint, a fundamental issue warrantingcloser examination is the convergence product’s impact onconsumer preference and choice—that is, how does thepresence of a convergence product (e.g., camera phone)affect the consumer preference and choice decision withrespect to the dedicated product counterparts (e.g., digitalcamera and mobile phone)? The answer may be contingenton the evolutionary stage of the technology, as we addresssubsequently.

Technology TrajectoriesIn the innovation literature, researchers have often looked totechnology trajectories for insights into high-tech products(e.g., Christensen 2000; Norton and Bass 1987; Sood andTellis 2005). As a trace of a given product’s evolutionarypath, the technology trajectory provides key markers alongthe product’s life cycle—that is, when the technologyundersupplies or begins to meet the required level of perfor-mance (Adner and Levinthal 2001), when the next-generation or substitute technology emerges (Norton andBass 1987), or when the basis for competition shifts to adifferent attribute (Christensen 2000). Furthermore, in thecontext of multiple categories, technology trajectories

2Although there is a general consensus on the direction of tech-nology trajectories (i.e., monotonically increasing in performanceover time) in the extant literature, the particular shape of the tra-jectories remains inconclusive, as recently illustrated by Sood andTellis (2005). Therefore, we do not make any assumptions aboutthe shape of the technology trajectories in the scope of this study.

facilitate the mapping of intercategory dynamics (Kim,Chang, and Shocker 2000).

Because the aim of our study is to explore the product-form preferences as technologies evolve, we section tech-nology trajectories into two parts for investigation.2 First,we examine consumers’ product-form preferences when theconvergence technology is in the early stages of commer-cialization. In general, manufacturers introduce conver-gence technology typically on a relatively lower trajec-tory—that is, the functional performance falls below theconsumers’ reference levels. For example, typical cameraphones in the initial years were equipped with 300,000 to400,000 pixels (e.g., VGA [video graphic array] quality,grainy picture resolution)—representing levels below theperformance “sweet spot” as considered from the con-sumers’ standpoint (Hughlett 2005). During this earlyphase, although the dedicated technology may or may notbe above the sweet spot, its trajectory nonetheless remainsabove that of the convergence because the latter is typicallya derivative technology of the former.

Second, with a sufficient progression in technology,specifications for convergence products are likely to catchup with the consumers’ performance sweet spot. A potentialimplication is that a shift in consumer preferences mayoccur as the performance levels cross the threshold. Theunderlying rationale comes from prior research in psychol-ogy and marketing, which documents that consumers areprone to perception biases and differential choices relativeto a reference level (e.g., Hardie, Johnson, and Fader 1993;Kahneman and Tversky 1979). Therefore, we reassess con-sumer preference for product form in this latter phase aswell. We also ascertain how expectations of future technol-ogy affect preference for and choice of current productforms. In the following section, we address these intercate-gory issues and formulate hypotheses across the two phasesby drawing from literature on new products and cognitivepsychology.

Phase 1: When Convergence Technology Is Belowthe Consumer Reference Level

As a general industry practice, convergence technology ini-tially emerges on a trajectory well below the consumers’reference level for pragmatic reasons (see Figure 1). Typi-cally, at this stage, (1) the state-of-the-art has not pro-gressed significantly much higher than the convergencetechnology, and (2) manufacturers are often constrained byeither technical or cost considerations in wholly transferringor adapting the dedicated technology to the convergenceplatform. Correspondingly, the introduction of convergedproducts in the lower end of the technology market presentsconsumers with the following intercategory choice situa-tion: All else being equal, which product-form option wouldhe or she choose?

Technology Convergence / 99

FIGURE 1Dedicated and Converged Technology Trajectories

Consumer’s reference level

Range of dedicated productTechnological trajectory

Range of converged productTechnological trajectory

Time

Perfo

rman

ce

H1a

H1b

Phase 1 Phase 2

Dedicated upper bound

Converged upper bound

Converged lower boundDedicated lower bound

3Hereinafter, we define “low” and “high” levels of performancerelative to consumers’ sweet spot (e.g., reference level) and opera-tionalize the reference level as that which is perceived as prevalentin the market.

Option A: A camera phone with 1-megapixel resolution.Option B: A digital camera with 1-megapixel resolution and a

mobile phone of similar quality as in Option A.

According to Christensen (2000), consumers typicallymake buying decisions about high-tech products by follow-ing a buying hierarchy, with performance (functionality andreliability) considerations at the top, followed by the conve-nience dimension. To elaborate, performance differencesamong the options would dominate the choice decision.However, if this dimension does not play a discriminatingrole, convenience subsequently becomes the next choicecriterion. Evidently, the buying hierarchy is not only limitedto the high-tech product context; a recent study by Brito,Aguilar, and Brito (2007) found a similar effect in the ser-vice context. Thus, as long as performance levels remainbelow the consumers’ sweet spot in the lower end of thetechnology market, we expect consumers to shift down inthe buying hierarchy, where convenience becomes thesalient competing dimension in their decision process.

A direct implication is that with convergence premisedon the convenience benefit (e.g., multicategory functionspacked into a single device), we would expect Option A(the converged product) to dominate Option B (the dedi-cated counterpart) in the lower end of the technology spec-trum.3 Formally,

4In Phase 2, there may be a range of convergence products thatare still below the consumers’ reference level, but the state-of-the-art convergence products will be above the consumers’ referencelevel, as Figure 1 indicates.

H1a: Consumers prefer the converged product option over itscorresponding dedicated counterpart at low levels oftechnological performance for a common given feature.

Anecdotal evidence from category sales figures alsoseems to support this position: In the early years, when themass-market digital camera technology had a relativelylow-quality average resolution, the camera phones outsolddedicated digital cameras at a rate of two-to-one (Gleeson2003). In other words, if a product lacks the required depthin its core competency (performance), the product’s breadthof features (convenience) may become increasingly impor-tant for consumer decision making. Progressing up the tech-nology trajectories (Phase 2), we next investigate con-sumers’ product-form preferences when the embeddedtechnology in convergence products satisfies consumers’reference standard.4

Phase 2: When Convergence Technology Is Abovethe Consumer Reference Level

In the evolution of technology trajectories, a sustainedgrowth of the convergence category often leads to increasedlevels of technology transfer from the dedicated category,and vice versa. This is the very situation in the cameraphone category today: The resolution in many cameraphones is reaching upward of a 5-megapixel count—thesame standard resolution available in many of the dedicateddigital cameras sold in nonprofessional, consumer markets.At such levels, camera phones can produce respectable,large-sized images for printing and displaying on externaldevices.

If the technological performance of the convergenceproduct has sufficiently fulfilled consumers’ performancerequirements in the latter phase of the technology trajectory(Phase 2), would there still be a systematic preference for aparticular product form, all else being equal, in the follow-ing choices situation?

Option C: A camera phone with 5-megapixel resolution.Option D: A digital camera with 5-megapixel resolution and a

mobile phone of similar quality as in Option C.

Applying Christensen’s (2000) buying hierarchy, weexamine whether performance considerations, as the pri-mary choice criterion, are likely to be activated in con-sumers’ minds at the higher end of the technology trajec-tory. Although the objective performance specificationsmay be equivalent between Options C and D, a recent studyin cognitive psychology by Zhang, Fishbach, and Kruglan-ski (2007) indicates that product-form differences in them-selves may lead to differential performance perceptions.

Specifically, Zhang, Fishbach, and Kruglanski (2007)address how consumers cope with multiple goals that areassociated with a shared path, which has a direct implica-tion for convergence products. In a series of experiments,Zhang, Fishbach, and Kruglanski show that as the numberof goals associated with a given means increased, con-


sumers revealed a tendency to discount the means’ effec-tiveness in achieving these goals. The underlying rationaleof the dilution process is that consumers establish a connec-tion between a goal and a means through association, andthe key factor underlying the association strength is theuniqueness of its path to the means (Anderson 1983). How-ever, associating additional goals with the means takesaway the exclusiveness of that path, thus weakening thestrength of the association. A direct implication is that withmultiple goals being intrinsic to the convergence notion,consumers are likely to discount the expected performancesof the integrated category functions. Therefore, Option D(dedicated option) is likely to dominate Option C (conver-gence option), in line with Zhang, Fishbach, and Kruglan-ski’s work. Accordingly, we formally state the hypothesison the consumer preference in Phase 2 as follows:

H1b: Consumers prefer the dedicated product option over itscorresponding converged counterpart at high levels oftechnological performance for a common given feature.

In summary, at low levels of technological performance,consumers are likely to resign themselves to substandardfunctional performance in either option; thus, they will lookto another decision criterion for deriving utility (e.g., conve-nience, which is provided by the convergence option). Fur-thermore, because they resign themselves to less-than-satisfactory performance, they do not deeply process themeans that lead to performance goals and thus do not trig-ger the goal-dilution process. In contrast, at high levels oftechnological performance, consumers know that theirfunctional performance goals can be realized/exceeded andthus are willing to pursue the attainment of functional goalsas their primary objective, even at the expense of conve-nience. Guided by functional performance as the salientdecision criterion, they process the means by which a prod-uct will deliver those goals more deeply, which leads to thegoal-dilution effect, and in turn, they reject the convergencein favor of the dedicated option.

Study 1MethodFifty-one undergraduate business students participated inexchange for course credit. The participants received ques-tionnaires containing information about two options ofproduct forms (for a sample questionnaire, see AppendixA). The first option consisted of two dedicated products: amobile phone and a digital camera. The second option wasa converged product: a camera phone that combines thefunctions of a mobile phone and a digital camera in a singlephysical unit. We counterbalanced the order of the product-form options. Participants’ task was to indicate which of thetwo product forms they would choose.

The between-subjects experimental design consisted ofa low-performance condition and a high-performance con-dition. The dependent variable was product-form choicebetween the two options. In the low-performance condition,the 1-megapixel resolution level was given in both the con-verged and the dedicated product-form options. In the high-performance condition, it was set at the 5-megapixel level.

The 1-megapixel level represented both the higher end ofthe camera phones and the lower end of digital cameras atthe time of data collection (at the end of 2004); analogously,we selected the 5-megapixel level to reflect the high end oftechnological standards. For example, “the sweet spot formass sales of digital cameras … last year … was 3 to 4megapixels, and this year it will likely rise again” (Hughlett2005, p. 1). The price level was the same for either product-form option: for example, $400 for a 1-megapixel cameraphone or $400 for a 1-megapixel digital camera and amobile phone. This price level was based on a pretest ofprices that undergraduate students paid for a mobile phone,rounded to the nearest hundred-dollar level of $300, and forthe digital camera, the industry average was more or less$100 per megapixel.

Measures

At the end of the questionnaire, there was a set of questionsthat measured the performance reservation value of the pic-ture resolution and also the future purchase intention of thecamera phone and the digital camera of higher perfor-mance. We used seven-point scales, ranging from 1 to 7megapixels, to measure the performance reservation valuesfor the digital camera and the camera phone. Specifically,participants were asked to indicate the minimum megapixellevel they would consider an acceptable performancerequirement for a digital camera and for a camera phone.

Results

In H1a (H1b), we predicted that more consumers would pre-fer the converged (dedicated) product form at low (high)levels of technological performance (see Figure 2). In sup-port of these hypotheses, participants were significantly

FIGURE 2Preference for Product Forms: Mobile

Phone/Digital Camera

84.0%

26.9%

16.0%

73.1%

.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

1 Megapixel 5 Megapixels

Converged Dedicated


more likely to choose the converged product form in thelow-performance condition, whereas the opposite was truein the high-performance condition (χ2 = 14.38, p = .0001).Of the participants, 84% (21 of 25) chose the convergedproduct option in the low-performance condition, comparedwith 26.9% (7 of 26) in the high-performance condition.

Furthermore, the examination of the performance reser-vation values (see Table 1) revealed strong support forZhang, Fishbach, and Kruglanski’s (2007) performance-discounting theory on multiple goals with a shared means:The performance reservation value was higher for the digi-tal camera than for the camera phone in both the high-performance condition (M = 3.54 versus 1.96; t = 13.916,p < .001) and the low-performance condition (M = 2.96versus 1.52; t = 11.066, p < .001).

Discussion

Overall, the results are consistent with Christensen’s (2000)buying-hierarchy framework. That is, when the perfor-mance level was below the sweet spot, the converged optionemerged as the preferred choice, which lends support to thenotion that convenience becomes the salient criterion whenperformance is no longer a competing factor. Moreover,when the performance was above the threshold, the dedi-cated option was the more preferred choice, which is con-sistent with the explanation of performance discounting.Although we expected performance discounting to occuronly in the high-performance condition, we also observeddifferential performance threshold values among productforms in the low-performance condition. Nonetheless,below the threshold, the discounting effect evidently israther inconsequential because consumers are likely toplace more weight on a nonperformance dimension as con-venience, as manifested in dominant choice shares of theconverged option. This finding further strengthens thebuying-hierarchy explanation for the observed preferencesin the intercategory context.

Phase 2+: When Consumers Form Expectationson Future Technology Trajectory

An inherent facet of a high-tech product category is thecontinued progression of performance along its technologytrajectory (Adner and Levinthal 2001; Christensen 2000;Kim, Han, and Srivastava 2002; Sood, Ashish, and Tellis2005). Accordingly, several studies have reported that manyconsumers are cognizant of the general trend of improvingperformances (and declining prices) in high-tech categories(Balcer and Lippman 1984; Bridges, Yim, and Briesch

1995; Mick and Fournier 1998). In addition, consumers’expectations for future technology have been shown toaffect their choice decisions in the present (Balcer andLippman 1984; Bridges, Yim, and Briesch 1995; Kim, Han,and Srivastava 2002). The underlying mechanism is thatformation of technological expectation leads consumers toupdate their currently held threshold values. Study 1 under-scored the importance of performance thresholds inproduct-form preferences; next, we explore the impact oftechnological expectation in an intercategory choicesituation.

To address whether and how the formation of futuretechnological expectation is likely to affect product-formpreferences, we consider a popular industry practice ofleveraging consumer expectations on future technology—namely, the preannouncement strategy (Robertson, Eliash-berg, and Rymon 1995). In general, firms make prean-nouncements of upcoming new products/technologies toconsumers and/or to the trade, often with an intent to signalpreemption against new entry (Robertson, Eliashberg, andRymon 1995) or predation against existing competitors(Bayus, Jain, and Rao 2001; Farrell and Saloner 1986). Inessence, these firms bank on the “anchor-and-adjustment”heuristic for the preannouncement to work. That is, theinformation the preannouncement provides will act as an“anchor” for consumers to “adjust” their current require-ments (Epley and Gilovich 2006).

Accordingly, our contention is that a preannouncementfor an impending technology is likely to affect the thresholdvalues associated with product forms, and in turn, thisresults in the shifting of product-form preferences if thededicated option in the current choice set falls below thenewly adjusted threshold value. The rationale is as follows:Consider the two following options, accompanied by a pre-announcement that 7-megapixel technology is expected tocome to the market in the next quarter:

Option E: A camera phone with 5-megapixel resolution.Option F: A digital camera with 5-megapixel resolution and a

mobile phone of similar quality as in Option E.

Through preannouncement, if the state-of-the-art tech-nology is now raised from the 5-megapixel to the 7-megapixel level, such information per se may affect con-sumers’ product-form preferences at the 5-megapixel level.Specifically, with 7 megapixels acting as a new salientanchor, consumers are likely to apply the anchoring-and-adjustment heuristic to their performance threshold in anupward direction toward the 7-megapixel level (Epley andGilovich 2006).

Regarding the extent of the adjustment, the anchoring-and-adjustment heuristic remains indeterminate—theadjustment is typically “insufficient” relative to the anchor(Epley and Gilovich 2006). Accordingly, in the scope of thisstudy, we do not address the magnitude of the adjustmentbut only that an upward adjustment will occur, which inturn will result in a relatively higher sweet spot and, thus,an increased preference for the converged option comparedwith the no-preannouncement context. Stated formally,

H2: A preannouncement of a forthcoming higher technologylevel leads to a relatively higher (lower) consumer prefer-

TABLE 1Performance Threshold Values: 1 Versus 5

Megapixels

1 Megapixel 5 MegapixelsProduct Form (n = 25) (n = 26)

Digital camera 2.96 3.54Camera phone 1.52 1.96


TABLE 2Performance Threshold Values: The Impact of

Preannouncement

No Preannouncement Preannouncement

Product Form (n = 40) (n = 37)

Digital camera 3.89 4.70Camera phone 2.03 2.50

ence for the converged (dedicated) product option than thecontrol condition with no preannouncement.

Study 2MethodIn Study 2, we used 77 participants to test H2. Participantsreceived questionnaires containing information about digi-tal camera and mobile phone functions in both dedicatedand converged forms, and they were asked to indicatewhich form they would prefer. The between-subjectsexperimental design consisted of a preannouncement condi-tion and a no-preannouncement condition. In the prean-nouncement condition, participants were asked to choosebetween a 5-megapixel digital camera and a camera phonewith a 5-megapixel digital camera function, given that a 7-megapixel model would be introduced in three months. Inthe no-preannouncement condition, no information aboutthe preannouncement was given; participants were simplytold to make the choice between the two product-formoptions.

Results

Consistent with H2, preference for the dedicated productform shifted toward the converged product form when thepreannouncement was made (see Figure 3). Of the partici-pants, 46% (17 of 37) chose the dedicated product form inthe preannouncement condition, compared with 77% (28 of40) in the no-preannouncement condition (χ2 = 4.59, p =.03).

An examination of the performance reservation valuesrevealed that for both the digital camera and the cameraphone, they shifted upward with the preannouncement of

future technological advances (see Table 2). For the digitalcamera, the performance reservation value was higher in thepreannouncement condition than in the no-preannouncementcondition (M = 4.70 versus 3.89; F = 13.455, p < .0001).Similarly, the performance reservation value for the cameraphone was higher in the preannouncement condition than inthe no-preannouncement condition (M = 2.50 versus 2.03;F = 4.301, p = .042).

Discussion

Although the results across Studies 1 and 2 reinforce thenotion that product-form preferences are contingent onthreshold values, there are two related issues that remainunresolved. The first is that price of the convergence basewas relatively more expensive than that of the convergedfeature in the low-technology situation, whereas the reversewas the case in the high-technology situation. Therefore,price effect cannot be ruled out as an alternative source ofdifferential results. The second is the generalizability of theresults across other category combinations (e.g., digitalcamera and MP3 player). In addition, we aim to assesswhether there are any differences in usability perceptionsacross product forms. Study 3 addresses these issues.

Study 3

Method

Study 3 employs different category combinations to exam-ine the robustness of the results of Study 1. In Study 3,digital camera is the platform category, and MP3 player isthe category being integrated onto the digital camera base inthe convergence option. Seventy-five undergraduate busi-ness students participated in this experiment in exchangefor course credit. The methodology used in Study 3 wassimilar to that of Study 1, except that different categorieswere used. Participants received questionnaires containinginformation about two options of product forms. The firstoption was a purchase consisting of two dedicated products:a digital camera and an MP3 player. The second option wasa purchase of a converged product: a digital camera with a converged MP3 player. The procedure and the depen-dent variable remained the same as those used in Study 1.The between-subjects experimental factor was a low-performance digital camera versus a high-performancedigital camera. Unlike in Study 1, however, the high-performance (low-performance) digital camera was set at 8

FIGURE 3Preference for Product Forms: Preannouncement

Effect

30.0%

54%

70.0%

46%

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10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

5 Megapixels 5 Megapixels + Preannounce

Converged Dedicated


FIGURE 4Preference for Product Forms: Digital

Camera/MP3 Player

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10.0%

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40.0%

50.0%

60.0%

70.0%

80.0%

Low Camera High Camera

Converged Dedicated

5In addition, patterns of performance threshold values were con-sistent with those of Study 1.

megapixels (2 megapixels) to reflect the high end (low end)of technological standards at the time of Study 3. The pricelevel was kept at a constant ratio (two-to-one) between thedigital camera and the MP3 player: $400 for an 8-megapixel digital camera and $200 for the MP3 player, or$600 combined in the high-performance condition, and$100 for a 2-megapixel digital camera and $50 for theMP3 player, or $150 combined in the low-performancecondition.

There was a set of two questions at the end of the ques-tionnaire. The first question was intended as a manipulationcheck, in which participants were asked about the perceivedperformance of the digital camera in question. Specifically,participants were asked, “Is the 2-megapixel digital camera(8 megapixels in the high-performance digital camera con-dition) lower or higher than the level of resolution currentlyprevailing in the market?” We used a five-point scale,anchored by “much lower” (1) and “much higher” (5). Thesecond question measured the perceived ease of use of thededicated and the converged product forms. Participantswere asked, “Which option is easier to use: Option A (dedi-cated) or Option B (converged)?” We used a five-pointscale, anchored by “definitely Option A” and “definitelyOption B.”

Results

Responses to the manipulation check revealed that themanipulation was successful. Participants in the low-performance digital camera condition indicated that the 2-megapixel camera was lower than the currently prevailinglevel (M = 1.29), whereas those in the high-performancedigital camera condition indicated that the 8-megapixelcamera was higher than the currently prevailing level (M =4.27). This difference was statistically significant (F =526.08, p = .00).

The results were consistent with those in Study 1, thusproviding some external validity to Study 1’s findings (seeFigure 4).5 Participants were significantly more likely tochoose the converged product form in the low-performancedigital camera condition, whereas the opposite was true inthe high-performance digital camera condition (χ2 = 13.49,p = .00). Of the participants, 74% (28 of 38) chose the con-verged product option in the low-performance digital cam-era condition, compared with 30% (11 of 37) in the high-performance digital camera condition.

The performance level of the digital camera had noeffect on perceived ease of use with respect to dedicatedversus converged product forms. Participants in both thehigh- and the low-performance digital camera conditionsindicated that the dedicated and the converged productforms were about the same with respect to ease of use (M =3.11 and M = 2.97 for low- and high-performance condi-tions, respectively; F = .277, p = .60).

Discussion

Our findings are consistent with Zhang, Fishbach, andKruglanski’s (2007) performance-discounting theory wheneither the platform category (Study 3) or the category beingconverged (Study 1) is at the higher end of the technologytrajectory. In addition, we ruled out two potential alternativeexplanations for the observed product-form preference pat-tern. Even when we held price level at a constant ratiobetween the platform and the added categories, we stillobserved the same pattern of results. Moreover, participantsdid not perceive differences in usability costs across theproduct forms at both low and high performance levels.

The robustness of the results raises an important ques-tion for manufacturers: Is there no way for a convergenceproduct to be successful at the higher end of the technolog-ical trajectory? For example, Philips CD-i (an ambitioushome-entertainment console that offered multiple interac-tive audio/video functions, including playback, games, andkaraoke) introduced in the late 1980s ended up costing thefirm more than $1 billion in losses. A more recent examplefrom the industry context comes from Sony’s Cyber-shotDSC-G1 (a 6-megapixel digital camera with a built-in MP3player) launched in March 2007. Since its introduction, theproduct concept has evidently not been well received in themarketplace, which prompted a highly unusual move by themanufacturer to quickly reposition the MP3 function into“background music function for slideshows.”

In essence, Sony’s repositioning is an attempt to high-light the relatedness among the multicategory functions inrelation to their distinctiveness. The resultant positioningthen becomes conceptually akin to a single-category prod-uct with enhanced perceived capability (a digital camerawith background music function for a slideshow). This lat-ter positioning (i.e., adding more features to a product) has


FIGURE 5Relational Processing and Preference for Product

Forms: Digital Camera/MP3 Player

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80.0%

90.0%

Low Camera High Camera

Control

Converged Dedicated

Low Camera High Camera.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Relational Processing

Converged Dedicated

been shown to be an appealing product strategy in a single-category context (Thompson, Hamilton, and Rust 2005).The overriding question then becomes whether the phenom-enon of enhanced perceived capability can successfully beemulated in a multicategory context, which would be ofgreat interest from both a theoretical and a managerialstandpoint.

Revisiting Zhang, Fishbach, and Kruglanski (2007) forinsights, we note that the extent of goal distinctivenesstends to moderate the discounting effect arising from ashared means. Specifically, Zhang, Fishbach, and Kruglan-ski show that priming participants on similar aspects ofmultiple goals (e.g., a writing task on goal similaritybetween reducing health risks and getting more nutrition)attenuated the discounting effect despite the shared means(e.g., organic food). We further extend the work of Thomp-son, Hamilton, and Rust (2005) by examining the effect in amulticategory context and also that of Zhang, Fishbach, andKruglanski to a product context in Study 4.

Study 4

MethodIn Study 4, we introduce a new condition by adding“relational-processing” manipulation (Meyers-Levy 1991),which is similar to the task in Zhang, Fishbach, andKruglanski’s (2007) study. To induce relational processing,we first presented the participants with a relational scenarioof a digital camera with an MP3 function that included“slideshow with background music.” We then asked the par-ticipants to come up with possible taglines for a print adver-tisement (see Appendix B). The control condition is withoutthe relational-processing task—in essence, a replication ofStudy 3. In Study 4, we did away with price information torule out any possible signaling effects of pricing on prefer-ences. The dependent variable and all other proceduresremained the same as in Study 3. Thus, the experiment con-sisted of a 2 (digital camera performance: high versuslow) × 2 (relational-processing instruction versus no pro-cessing instruction) between-subjects design. One hundredthirty-two undergraduate business students participated inthe experiment in exchange for course credit. At the end ofthe questionnaire, there was a measure that assessed theperceived goal relatedness between the digital camera andthe MP3 player: “How closely related are the goals associ-ated with digital camera and MP3 player functions?” Weused a five-point scale, anchored by “definitely unrelated”(1) and “definitely related” (5).

Results

The analysis of the “relatedness” question revealed that themanipulation was successful. The perceived relatedness washigher in the relational-processing condition than in thecontrol condition (M = 3.90 and 2.19; F = 99.39, p = .00).Figure 5 illustrates the results of Study 4. To examine therole of relational-processing instruction, we performed aseries of contrast analyses using logistic regression. Whenwe provided no processing instruction, 82% of the parti-cipants chose the dedicated product form in the high-

performance digital camera condition, compared with 26%in the low-performance digital camera condition (χ2 =17.72, p = .00), replicating the results of Study 3. When weprovided the relational-processing instruction, the digitalcamera performance level had a smaller but still significantimpact on product-form choice (χ2 = 6.86, p = .01).Notably, the relational-processing instruction played a sig-nificant role in reducing the preference for the dedicatedproduct form in the high-performance camera conditionsfrom 82% to 56% (χ2 = 4.10, p = .04).

Discussion

Tasking participants on functional relatedness led to attenu-ation in performance discounting in the high-performancecondition compared with the control condition. Consistentwith the performance results, comparison of choice sharesfor the convergence product form shows gains in task ver-


sus control condition. Although the relational-processingtask attenuates the performance discounting, the effect isstill not strong enough to overcome the discounting effect tobe on par with the perceived performances of dedicatedproduct forms.

General DiscussionDespite the escalating importance of convergence move-ment in the portable consumer technology sector, the topicremains relatively unexplored in the literature to date.Therefore, the objective of this research was to provide theinitial groundwork and motivation for studying the inter-category dynamics among converged and dedicated productforms. We approached the issue from the demand-side per-spective along the technology trajectories. In the process,we found some regularities in consumers’ decision making.Foremost, consumers showed a tendency to select con-verged product forms over dedicated ones when the level oftechnological performance was relatively low; however, thepattern of choice was reversed for relatively high technolog-ical performance levels.

One theoretical account forwarded is the buying-hierarchy explanation. That is, at lower technology levels,in which performance is not a significant factor, we foundthat consumers value the convenience dimension and thusselect the convergence option. However, at higher technol-ogy levels, in which the performance dimension becomessalient, consumers tend to select the dedicated option. Theunderlying logic is that, in general, consumers discount per-ceived performance when there are multiple goals associ-ated with a shared path. Nonetheless, our findings indicatethat manufacturers may attenuate this discounting effectwhen making salient some related aspects among the multi-ple goals.

We also examined consumer reactions when there is apreannouncement of a forthcoming higher-level technology.Evidently, consumers adapt their reservation values accord-ingly. The result is a shift of shares toward the convergedform at current high technology levels—perhaps attribut-able to a higher likelihood of the dedicated ones fallingbelow the newly adjusted set of reservation values. Tradi-tionally, the preannouncement literature has focused on newproduct announcements as signals of preemption againstnew entry (i.e., Roberston, Eliashberg, and Rymon 1995) orpredation against existing competitors (i.e., Bayus, Jain, andRao 2001; Farrell and Saloner 1986). Our finding intro-duces an additional dimension to a preannouncement’simpact for product-line management considerations—namely, that consumers’ preference for the product formmay be influenced—in addition to the already identifieddimensions of purchase timing, brand choice, and genera-tion choice in the extant literature on preannouncements.

Finally, for an exploratory insight into the futureupgrading patterns by convergedversus dedicated-productowners, we further examined the purchase intention mea-sures collected in Study 1. Participants in the low-performance condition were asked about their purchaseintentions of a 5-megapixel digital camera/camera phone,assuming that they had already bought 1-megapixel digital

camera/camera phone. We measured purchase intentions onfive-point scales ranging from “very unlikely” (1) to “verylikely” (5). Our findings show that when the participantsimagined that they had already bought a 1-megapixel cam-era phone, their purchase intention was higher for the 5-megapixel digital camera (M = 4.04) than for the 5-megapixel camera phone (M = 2.82; t = 4.22, p = .0001).Moreover, when the participants imagined that they hadalready bought a 1-megapixel digital camera, their purchaseintention was higher for the 5-megapixel digital camera(M = 3.86) than for the 5-megapixel camera phone (M =2.89; t = 3.58, p = .0001). Thus, regardless of the product-form ownership at the low level of technological perfor-mance, there is a clear pattern of greater preference for thededicated product form at the high performance level. Thisexploratory analysis suggests that the robustness of thestudy’s main findings can extend beyond initial purchasesto upgrade occasions as well.

Managerial ImplicationsThe demand-side perspective of the “anywhere technolo-gies” market has yielded several key managerial implica-tions for the supply side. First, our study shows thatconsumers prefer the convergence option at low techno-logical levels but dedicated forms at the high end. From aproduct-line management standpoint, manufacturers shouldpursue a tiered product-form strategy, offering convergencevarieties at the lower end of the technological trajectory andkeeping the dedicated products in the trajectory’s moreadvanced sections. Second, the focus should be on elaborat-ing on the convenience benefits for the converged productsinstead of the performance dimensions. Indeed, a lesson can be learned from the all-in-one shampoo (shampoo +conditioner) manufacturers’ strategy of emphasizing theconvenience (e.g., time-saving “wash-and-go” feature)benefits for such products rather than the intrinsic perfor-mance aspects. For high-performance dedicated products,the key positioning strategy should be to highlight their corefunctional performance and to avoid attracting attention toany nonessential aspects that may dilute performanceperceptions.

Nonetheless, a manufacturer that still wants to pursue ahigh-performance convergence strategy—for example,companies such as Samsung and LG Electronics are at theforefront of pushing 8-megapixel camera phones intotoday’s marketplace—should consider (1) designing theproduct so that the integrated features have some functionalsynergy with the core feature and (2) highlighting this infor-mation in the communication campaign. This recommenda-tion is based on our finding that inducing consumers toconsider relatedness among the different features in conver-gence products somewhat mitigates the “jack-of-all-trades/master-of-none” concern.

Finally, the ownership figures show a significant num-ber of consumers possessing both product forms in the caseof camera phones and digital cameras (Softpedia News2005). As we deduced in our exploratory analysis, the prod-uct portfolio of ownership is likely to comprise a lower-performance camera phone and a higher-performance digi-


tal camera. For retailers, such a pattern signals an opportu-nity to pursue a mixed-bundling strategy (Stremersch andTellis 2002)—that is, offering consumers price discountsfor buying a package that consists of a lower-technologyconvergence product and a higher-technology dedicatedproduct, again focusing on the convenience benefits for theformer and the performance facet for the latter.

Limitations and Further ResearchIn this research, we forward the performance-discountingtheory as a key underpinning phenomenon that drives thepreference for dedicated over converged options at highperformance levels. However, it is also possible that con-sumers consider different usage situations for convergedversus dedicated products. Further research should examinethe usage context in product-form decisions and also assessprocess measures to build greater confidence in the pro-posed processes.

We studied the intercategory dynamics at the categorylevel and without considering brand effects. Because thereare firms that are primarily known for digital cameras only

(e.g., Canon, Olympus), for mobile phones (e.g., Nokia,Motorola), or for both (e.g., Samsung, Sony), furtherresearch could investigate how the breadth of expertisemoderates consumer preferences for product forms.

In addition, we examined technologies with perfor-mance levels that span from below to above the referencelevels held by consumers. From a product life-cycle stand-point, these stages are characteristic of introductory andgrowth stages. In the maturity stage, several generations ofproducts are often available concurrently in the market-place. In this research, we presented choice tasks that arelimited to the same technology levels of different productforms, though we assessed participants’ purchase intentionsfor higher-generation products. There is an opportunity forfurther research to directly explore consumer preferencesfor product forms in a multigeneration setting. Finally, wefocused solely on portable convergence products. Investi-gating the intercategory issues in the context of nonportablecategories of converged and dedicated products is warrantedfor a greater generalizability to the current findings; we alsoleave this for further research.


Instructions. We are interested in learning about yourpreference on mobile phones, digital cameras, and cameraphones. Please complete all the questions.

Note: Sample resolution of a 1-megapixel image (actualpicture sizes)

Imagine that you are considering the following package atthe store. Assume that you presently do not own any of thefollowing products:

Option 1: Price $400 (total price of two separateproducts)

•Mobile phone ($300)•Digital camera with 1 megapixel ($100)

Option 2: Price $400•Integrated camera phone➣with a 1-megapixel digital camera function

Which would you choose between Option 1 and Option 2?(please circle one):

1. Option 1 (buying two separate products)2. Option 2 (buying one product with two features)

APPENDIX AStudy 1: Sample Questionnaire

Low-Performance Condition High-Performance Condition

Instructions: We are interested in learning about yourpreference on mobile phones, digital cameras, and cameraphones. Please complete all the questions.

Note: Sample resolution of a 5-megapixel image

Imagine that you are considering the following package atthe store. Assume that you presently do not own any of thefollowing products:

Option 1: Price $800 (total price of two separateproducts)

•Mobile phone ($300)•Digital camera with 5 megapixels ($500)

Option 2: Price $800•Integrated camera phone➣with a 5-megapixel digital camera function

Which would you choose between Option 1 and Option 2?(please circle one):

1. Option 1 (buying two separate products)2. Option 2 (buying one product with two features)

APPENDIX BStudy 4: Relational-Processing Instruction

A consumer electronics company is about to introduce adigital camera with a built-in MP3 function that can play aphoto slideshow with background music.

Instruction:

Your job is to come up with a tagline to be used in a maga-zine ad for the general public.

The requirement is to highlight how the “background music”feature of the built-in MP3 player can enhance the digitalcamera’s slideshow.

In the spaces provided below, please come up with tag-line(s) fitting the above requirement.


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