Early product launches: How will consumers respond?

Apr 19, 2011

A new study in the Journal of Consumer Research explains why consumers often indicate they are willing to pay more for a product that is not yet available—but are reluctant to pay that price when the product is ultimately launched.

The answer lies in the consumers' distance from the purchase. "In many product evaluations, a purchase is somehow removed from one's direct experience," write authors Torsten Bornemann and Christian Homburg (both University of Mannheim, Germany). For example, may evaluate a preannounced new product long before it is available for purchase (temporal distance), or they may evaluate a product for someone else rather than for themselves (social distance).

The researchers discovered that consumers who evaluated a high-priced product when the purchase was temporally or socially distant tended to interpret high prices as reflecting high quality. "Consumers who face an immediate purchase, however, focus more on the role of price as an indicator of monetary sacrifice," the authors write.

"An examination of the underlying cognitive processes reveals that psychological distance leads people to focus more on the benefits of a product, thus increasing the likelihood of price-quality as opposed to price-sacrifice inference," the authors write.

Sometimes consumers evaluate first from a distant perspective (like a product preannouncement) and later from a closer perspective (when a product is launched and available for ). In one study, the authors simulated a prennouncement and subsequent launch of a product. They showed that once the participants evaluated the item's price from a distance, their perceptions of the quality of the product "stuck." Those consumers were more willing to pay more than participants who had no prior exposure to the product's price.

"Consumers often delay the adoption of a newly introduced product because they feel its price is too high," the authors write. "Our findings suggest that consumers' reluctance due to sacrifice-related concerns at the time of launch may be attenuated by announcing the product's price well in advance of the actual product launch."

Explore further: Pioneering research unveils new method for quantifying people-related risks within the LNG industry

More information: Torsten Bornemann and Christian Homburg. "Psychological Distance and the Dual Role of Price." Journal of Consumer Research: October 2011(published online March 18, 2011).

add to favorites email to friend print save as pdf

Related Stories

Extended service contracts: When and why do people buy them?

Jun 15, 2009

Consumer experts have long recommended against buying Extended Service Contracts (ESCs) with products, since they are rarely cost effective. A new study in the Journal of Consumer Research examines the reasons why so man ...

Recommended for you

Performance measures for CEOs vary greatly, study finds

4 hours ago

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

9 hours ago

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

Sharing = Stealing: Busting a copyright myth

Apr 11, 2014

Consumers copy and share digital files. This has been blamed for a potentially catastrophic decline in certain markets. But why do consumers copy? And is it as economically harmful as often thought?

User comments : 0

More news stories

Down's chromosome cause genome-wide disruption

The extra copy of Chromosome 21 that causes Down's syndrome throws a spanner into the workings of all the other chromosomes as well, said a study published Wednesday that surprised its authors.

Researchers see hospitalization records as additional tool

Comparing hospitalization records with data reported to local boards of health presents a more accurate way to monitor how well communities track disease outbreaks, according to a paper published April 16 in the journal PLOS ON ...

Ebola virus in Africa outbreak is a new strain

The Ebola virus that has killed scores of people in Guinea this year is a new strain—evidence that the disease did not spread there from outbreaks in some other African nations, scientists report.