Wharton-SMU Research Center

In-House Seminar

Guest Speaker:

Robert Meyer
Professor of Marketing, The Wharton School, University of Pennsylvania.

Topic:

“Consumer Learning of Product Innovations"

Venue:

Eu Tong Sen Building, Level 1, Seminar Room 2
Singapore Management University
469 Bukit Timah Road, Singapore 259756

Date:

Thursday, 31 July 2003, at 4.00pm

Reservation:

This seminar is free. Places are limited. Please confirm your attendance by Wednesday, 30 July 2003, 12 noon with Ms. Lim Lih Yeng at lylim@smu.edu.sg or telephone: 6822-0197.

About the Seminar:

A core problem facing manufacturers of durable goods is how to enhance the design of existing generations of products to encourage replacement purchases. What makes multi-generational design strategies difficult is that while attribute innovation is obvious necessary condition for product adoption, products that are seen as too innovative may be rejected by the effects of technological lock-in: the aversion consumers have for incurring the switching costs associated with learning new technologies. In this process we explore how consumers resolve these competing forces in a controlled laboratory investigation of decisions to adopt a new generation of a computer gaming device. The essence of the paradigm is that subjects are trained to play, for money, one of two different versions of a Pac Man-like arcade game where icons are moved using different kinds of controls. After becoming familiar with one control format subjects are then given the opportunity to purchase a new generation of the game that allows use of both types of controls. Willingness to pay is elicited by a Becker-Marchak procedure, where purchase prices are deducted from overall payments.
The results of the experiments suggest a product-adoption bias that we term the paradox of enhancement: given the opportunity to purchase a new device, subjects express (and incur) an extremely-high willingness to pay, implying strong prior beliefs about the value of the supplemental set of controls. When the new device is acquired, however, subjects display limited long-term utilization of these new controls, and limited experimentation with their use. Hence, the mechanisms that drive decisions to adopt new generations of products versus that which drives how they are used appear quite different, with the former displaying limiting forecasting ability. Implications of the work for on-going research in consumer new-product decision making and product design are explored