Technology and service investments in the presence of feature fatigue and word-of-mouth

In the digital age, firms continuously look for leading technologies and make products of superior quality to satisfy new and sophisticated consumers’ needs. Although this approach strives to sell a product more appealing to customers, it also renders the product more complex and difficult to use, generating the feature fatigue effect. This is characterized by feelings frustration experienced by consumers when purchasing high-tech products with many appealing features, most of which turn out to be undesired, useless, and difficult to use. We study the impact of the feature fatigue effect on a manufacturing firm’s policies in designing its product–service portfolio. We consider two periods in order to capture the effect of customers’ word-of-mouth originating from feature fatigue, which is shared with other potential customers. Therefore, we assess not only the impact of feature fatigue but also the extent to which this effect can be alleviated by after-sales service. We capture feature fatigue by first considering a base model without this effect and then comparing the manufacturer’s decisions regarding quality, pricing, and service when it has either clear or noisy effect. Our findings reveal that feature fatigue drives manufacturers to under invest in quality and to replace penetration pricing policies with skimming policies. In addition, we demonstrate that after-sales service cannot fully mitigate the detrimental effect of feature fatigue on a manufacturer’s profits.