An analysis of consumer training for feature rich products

Many products now are loaded with an enormous number of features. It creates a great challenge for consumers to fully explore functionalities of those products. A recent trend is that manufacturers that market feature rich products start to provide consumer training programs. In this paper, we study the motivation of a manufacturer to offer training to consumers and how the training related costs affect his profits. We use a two dimensional consumer heterogeneity model to capture the consumer's learning cost and valuation of features. We show how training shifts consumer's purchasing decisions and the conditions under which the manufacturer is motivated to offer training. Two specific situations are investigated: when training is required and when training is optional. We show that if the manufacturer can effectively and cost efficiently deliver the training program, then optional training can make the product more attractive and improve the manufacturer's net gains the most. Our results also indicate that the availability of online educational tools is one of the reasons for recent trend in consumer training.

► Modeled consumer choices using a two-dimensional heterogeneity model.
► Derived manufacturer's pricing decision for feature-rich products.
► Examined the effect of required and optional training on consumer choices.
► Studied different training program design problems with managerial insights.