Mitigating the feature fatigue effect for smart products through digital servitization

Abstract

We analyze the problem of a manufacturer developing smart products and selling them to consumers who can be subject to the feature fatigue effect. Feature fatigue occurs with the presence of many features (smart products are typically over featured goods) that make consumers excited during the purchasing phase while becoming useless and complicated during the consumption phase. The latter negative implications induce frustration and regret among consumers, who can associate these negative feelings and effects with the brand, leading to a detrimental impact on its value. We capture the effect of feature fatigue on brand value through a dynamic model in which the stock of goodwill decreases with excessive investments in technology, which are the main drivers to create fashionable, attractive, and appealing features. We propose a digital servitization strategy to mitigate these negative effects and discover that firms offering digital servitization can end up economically worse off because feature fatigue plays a key role in the optimal strategies. In contrast, firms are economically better off and resolve feature fatigue when digital servitization is independent of other strategies. We identify cases in which digital servitization does not provide any benefit, when it completely nullifies feature fatigue effect, and when its activation complements either short-term or long-term strategies. Our findings are then supported and proofed empirically to increase their generizability.