Impacts of consumer regrets on product demos and pricing strategy in new product release

Abstract

When customers lack information about a new product, they may experience regret after making their purchase decisions. Thanks to anticipated regret, consumers are motivated to learn more through demonstration (Demo). To understand the impact of consumers' anticipated regret, we propose an analytical model to identify a firm's best pricing and demo strategies. If the current product price is exogenous, Repeat Regret (RR) is positively related to the new product price and demo degree, while Switch Regret (SR) exhibits a negative relationship. In addition, the effects of RR and SR on demo are non‐monotonic when the current product is endogenously priced.