How to Exploit the User Base for Online Products: A Product Integration Perspective

ABSTRACTWhen online vendors have gained a strong user base through a flagship product, the basic principles of competitive strategy dictate that they seek to extend their product lines. Taking advantage of existing traffic to introduce a new product presents a critical opportunity for these vendors. Since users increasingly emphasize cross-product integration, the integration of newly extended products with a flagship product is important in exploiting the user base. In contrast to the proliferation of cross-product integration worldwide, little is known about relationships between product integration and cognitive, behavioral, and decision measures of users. Drawing on the literature in learning efficacy and value transference, we assessed and compared the effects of three product integration formats currently used online (value-added integration, add-on module integration, and data-interface integration) on consumers' intention to use an extended product in a scenario-based experiment. The findings suggest that value-added integration is associated with higher levels of perceived diagnosticity and perceived entitativity than data-interface and add-on module integration. Perceived diagnosticity and perceived entitativity, in turn, have a significant effect on consumers' intention to use the extended product. This study contributes to both research and practice by advancing the overall understanding of how to exploit the online user base, as well as by providing important insights into online product design and promotion.Keywords: User Base, Product Design, Product Integration, Product Understanding, Entitativity1. IntroductionThe key asset and indicator of the success of an online product is its user base [McIntyre & Subramaniam 2009]. Once online vendors have gained a strong user base through a flagship product, the basic principles of competitive strategy dictate that they seek to leverage into adjacent product spaces, exploiting the key assets that give them a unique ability to explore the potential of existing consumers in those spaces [Shapiro & Varian 1999; Verhoef et al. 2007; Zhu & Iansiti 2012]. For example, after having great success in the search engine market, Google launched email (Gmail), instant messenger (GTalk), and electronic payment (Google Checkout) services. After the success of its web portal, Yahoo launched an online instant messenger service (Yahoo messenger) to extend its product lines.Undoubtedly, after launching such new products, online vendors try to induce the large number of users of their flagship products to use their newly extended products. However, due to the low entry barriers and easy imitation of product offerings, online merchants are challenged in new markets by other vendors' intense competition and struggle to extend their leadership from one market to the other [Zhang et al. 2011]. For example, as a late entrant, Gmail was challenged by the existing email service vendor, Yahoo, and failed to dominate the email service markets. Similar incidents occurred with Yahoo messenger in the competition with MSN in the instant messenger market. Given this growth in competition, taking advantage of existing traffic to introduce a new product presents a critical opportunity for firms.Online product integration is defined as the assembling of different online products together to facilitate data sharing (such as information about a user profile or preference settings) to enhance the overall value to end users through products' mutual cooperation [Nambisan 2002; Sengupta 1998]. Since users are increasingly emphasizing cross-product integration, the integration of new products with focal products is important in leveraging the user base. As an important method of traffic sharing, online product integration has become more of a strategic necessity than a source of market advantage [Iansiti 1995; Cusumano & Yoffie 1998]. The present study poses the following questions that have thus far received little theoretical and empirical attention: (1) To what extent does online product integration influence users' intention toward the newly extended product? …