You want to sell this to me twice!? How perceptions of betrayal may undermine internal product upgrades

Abstract

Physical products (e.g., cars, smartphones) increasingly evolve into dynamic service platforms that allow for customization through fee-based activation of restricted add-on features throughout their lifecycle. The authors refer to this emerging phenomenon as “internal product upgrades”. Drawing on normative expectations literature, this research examines pitfalls of internal product upgrades that marketers need to understand. Six experimental studies in two different contexts (consumer-electronics, automotive) reveal that consumers respond less favorably to internal (vs. external) product upgrades. The analyses show that customer-perceived betrayal, which results from increased feature ownership perceptions, drives the effects. Moreover, this research identifies three boundary conditions: it shows that the negative effects are attenuated when (1) the company (vs. consumer) executes the upgrading, and (2) consumers upgrade an intangible (vs. tangible) feature. Finally, consumers react less negatively when (3) the base product is less relevant to their self-identity.

Integrated Acceptance Model for On-demand Car Functions: exploring determinants of drivers' acceptance

“…9770/jesi.2023.11.1(8) 133 manufacturers offer temporary access to features such as heated seats in return for subscription fees (Schaefers et al, 2022). Hence, customers can reconfigure their cars for an additional fee by activating those features throughout their ownership (Garbas et al, 2022). A recent study refers to this phenomenon as "on-demand features".…”

“…Manufacturers are expected to earn an additional 155 billion € in 2022 by offering consumers the opportunity to enhance their vehicles over their lifetime. Moreover, manufacturers can reduce production costs by realizing economies of scale by producing cars with identical features (Garbas et al, 2022).…”

“…Recently, automotive manufacturers like Tesla or Mercedes-Benz have transformed their firms from a product-to a service-centric approach and evolved their vehicles into dynamic service platforms by selling vehicles with built-in add-on features (e.g., adaptive headlights, restricted battery power) that are deliberately restricted by design in their function (Raddats et al, 2019;Garbas et al, 2022;Ng & Wakenshaw, 2017). Similarly, other…”

A review and future avenues for psychological ownership in consumer research

“…An object can be psychologically part of an individual's endowment, a part of our extended self (Belk, 1988, 2018), and thus deemed valuable. A target psychologically owned is valued more than one that is not, as evidenced by a greater willingness to pay (Asatryan & Oh, 2008; Brasel & Gips, 2014; Fuchs et al, 2010; Garbas et al, 2022; Lessard‐Bonaventure & Chebat, 2015; Peck & Shu, 2009; Reb & Connolly, 2007; Shu & Peck, 2011) and greater purchase intentions (Spears & Yazdanparast, 2014). Lessard‐Bonaventure and Chebat (2015) reveal that greater PO also leads to a greater likelihood in purchasing an extended warranty, but it is moderated by the nature of the product and the perceived risk.…”

“…Anticipatory responses are intended to avoid infringement, such as marking the target as owned by leaving a coat on a chair or by posting a selfie with the item on social media; reactionary responses occur after infringement such as leaving less tip, negative facial expressions, and retaliation (Brown et al, 2005; Kirk et al, 2018). Garbas et al (2022) examine internal product upgrades that they define as a feature that is already present in a purchased product, but that is activated after purchase by paying a fee. They reveal that consumers feel betrayed when they own a product, yet the company seems to claim ownership by exerting control over the product.…”