Consumer Informedness and Hyperdifferentiation: An Empirical Test of the 'Trading Down' and 'Trading Out' Hypotheses

Consumer informedness plays a critical role in determining consumer choice. Companies now use hyperdifferentiation and resonance marketing strategies to benefit from the long-tail. We test the theory of consumer informedness in a field experiment. The data are from two stated choice experiments in the pubic transport industry in the Netherlands. The increasing implementation of smart card and mobile technology provides opportunities for service providers to achieve new 'best practices' in revenue management. The results provide evidence for trading down (purchase the product with the lowest price) and trading out behavior (purchase the product that suits a specific need). They also have implications for pricing and revenue management for public transport market.