Consumer Informedness and Firm Information Strategy

Consumer informedness plays a critical role in determining consumer choice in the presence of information technology deployed by competing firms in the marketplace. This paper develops a new theory of consumer informedness. Using data collected through a series of stated choice experiments in two different research contexts, we examine how consumer characteristics and observed behaviors moderate the influence of price and product informedness on consumer choice. The results indicate that different types of consumer informedness amplify different consumer behaviors in specific consumer segments. In particular, we found that price informedness is more influential among consumers in the commodity segment. They exhibit greater trading down behavior, which represents stronger preferences for choosing the products that provide the best price. In contrast, product informedness is more influential among consumers in the differentiated segment. This group exhibits greater trading out behavior, involving stronger preferences for choosing products that best suit their specific needs. These results suggest that firm information strategy should take into account consumers' characteristics, their past observed behaviors, and the impact of consumer informedness. We also discuss the theoretical contributions of this research and its broader implications for firm-level information strategy.