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Ask or infer? Strategic implications of alternative learning approaches in customization

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  • Fay, Scott
  • Mitra, Deb
  • Wang, Qiong
Abstract
Learning about a customer's preferences is a critical first step in the customization process. Broadly, firms adopt two alternative learning approaches: (1) ask, i.e., solicit preference information directly from the customer (S-Learning), or (2) infer, i.e., deduce preference information based on past observations of the customer as well as those of other customers (O-Learning). Most existing research on customization strategy focuses on a firm's marketing mix decisions, implicitly assuming away how the firm learns about customers. We contribute to this literature by examining how a firm's use of a specific learning approach impacts competition, particularly its rival's choice of learning approach. We find that O-Learning provides a credible signal for relaxing price competition, while S-Learning does not. Further, S-Learning by a firm creates a disincentive for rivals to also invest in S-Learning. We survey business customers and find significant evidence supporting our theory. We conclude with several managerial implications of our theory including how a firm can optimally select its learning strategy in order to impact its competitive environment.

Suggested Citation

  • Fay, Scott & Mitra, Deb & Wang, Qiong, 2009. "Ask or infer? Strategic implications of alternative learning approaches in customization," International Journal of Research in Marketing, Elsevier, vol. 26(2), pages 136-152.
    • Handle: RePEc:eee:ijrema:v:26:y:2009:i:2:p:136-152
    DOI: 10.1016/j.ijresmar.2008.12.003
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    3. Khan, Sana Akbar & Qureshi, Salman Ali & Hunjra, Ahmed Imran, 2014. "CRM Implementation: A Descriptive Study of the Service Industry in Pakistan," MPRA Paper 60788, University Library of Munich, Germany.

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