Willingness of consumers to pay for personalized products and services

Abstract

Based on the study conducted by us on the topic of ‘Willingness of consumers to pay for personalized products and services’ we observed that personalization is a need of an hour for the companies to retain the customers and stay ahead of the competition. Today, companies in mass consumer goods are also increasingly moving towards the phenomenon of personalization to increase the customer engagement. Personalized product create emotional bonding with the product as user has invested his/her efforts in making the product. This creates an endowment effect and results consumer’s readiness to pay price premium for such services especially for the category of personalized gifts. Based on our findings consumers are usually ready to pay 50%-75% of the price premium on such personalized products depending on the level of personalization and utility of the product. This is also dependent on the category of the product in consideration.