What Makes People Upgrade Products? Thinking About Self-Improvement
From upgrading mobile phones to trading in cars, consumers often face the decision of whether to buy new versions of products they already own. As marketers know, product improvement is a key driver of consumers’ decision to upgrade—the greater the improvement between the previous and new iPhone, the more likely consumers are to upgrade. At best, this encourages R&D efforts and the creation of more technologically advanced products and services. At worst, this encourages dubious claims of “new-and-improved” products that are merely repackaged versions of their predecessor.
Regardless of how much a product has actually improved, marketers recognize that it is the subjective perception of improvement that truly matters. What, then, shapes people’s perceptions that a given improvement is substantial or trivial?
Our research suggests that consumers’ own sense of self-improvement is one factor that can increase perceptions of product improvement and subsequently heighten the desire to upgrade.
In five studies involving 1,239 U.S. participants, we measured or manipulated perceived self-improvement as well as brand identification to examine their effects on product improvement judgments and the desire to upgrade.
In our first study, participants from an online panel were primed to think about how they have improved over the past ten years and then viewed information comparing the features of the iPhone 5 and the iPhone 6. Participants then rated how much the iPhone had improved, their willingness to pay to upgrade to the newest iPhone, their level of identification with Apple, and their perceived self-improvement. For people who strongly identified with Apple, the higher they rated their own self-improvement, the higher they rated the improvement in the iPhone, and the higher their willingness-to-pay to upgrade. When identification with Apple was weaker, this effect did not hold.
Why does this happen? To explain this effect, we turned to social psychology research on egocentrism, or the tendency to focus on oneself and use self-evaluations as an anchor for judgments of external entities such as brands. Typically, when people identify with a brand, they perceive their own traits in the brand; conversely, when people disidentify with a brand, they perceive the opposite of their traits in the brand.
To test this explanation, one experiment examined the role of self-focus. Participants were randomly assigned to focus on their own change or focus on a friend’s change before rating the improvement in the Samsung Galaxy phone and their intentions to upgrade. We found that participants who strongly identified with Samsung and focused on their own self-improvement (vs. stability) perceived more improvement in the Samsung Galaxy product line and thus were more likely to upgrade; however, participants who strongly identified with Samsung and focused on a friend’s self-improvement (vs. stability) did not demonstrate this effect.
Providing further insight into the psychological processes at play, we examined how the desire for self-esteem is involved in the observed phenomenon. Psychology research has found that people demonstrate stronger egocentric biases when they have an active goal to feel good about themselves, because seeing our own attributes in the world around us reinforces the desirability of these attributes. Accordingly, we reasoned that if egocentrism underlies the effect, then the effect should be weaker when people’s need for self-esteem is already satisfied, but stronger when people’s need for self-esteem is heightened.
To test this, a third experiment manipulated whether participants had an opportunity to satisfy self-esteem needs in addition to the procedures from the previous studies. Supporting our prediction, when participants were able to momentarily boost their self-esteem before evaluating the brand, focusing on self-improvement (vs. stability) no longer increased product improvement perceptions and upgrade intentions. However, when participants had no opportunity to boost their self-esteem, focusing on self-improvement had the same positive effects on brand improvement ratings and product upgrade intentions observed in our previous studies. Notably, the product category in this experiment was athletic shoes, suggesting that the phenomenon generalizes beyond consumer technology products.
A final experiment demonstrated how managers can apply the insights from the earlier studies. We directly evoked thoughts of self-improvement using an advertisement for a new iPhone. Some participants saw the tagline “You’ve improved in significant ways. This is 7,” whereas others saw the neutral tagline “This is 7.” When self-esteem needs were high and identification with Apple was high, participants who viewed the self-improvement ad (vs. the neutral ad) perceived more improvement in the iPhone and were more willing to upgrade.
Altogether, these findings have substantial practical implications for marketers. Product upgrades are a key source of revenue in many industries, and marketers face the perennial challenge of determining how to motivate existing customers to upgrade their products. Our research suggests that evoking thoughts of self-improvement when promoting new versions of products may be an effective means of motivating product upgrades.
There are a number of ways that marketers may bring these thoughts of self-improvement to mind. As demonstrated in our final experiment, advertisements could simply state that people have improved, or perhaps even pose this as a question (e.g., “How have you improved?”), effectively leveraging human suggestibility.
Alternatively, advertisements could encourage comparisons to inferior past selves by using archetypes such as “awkward teenage years.” The resulting sense of self-improvement may transfer to the advertised brand and ultimately encourage product upgrades.
Finally, rather than explicitly inducing a sense of self-improvement, marketers could specifically target customers who have recently undergone positive major life events. For example, recent graduates, newlyweds, and new homeowners may all experience a heightened sense of self-improvement, which could carry over to their judgments of new versions of products and motivate product upgrades. Indeed, such tactics may prove particularly useful in the mobile phone industry, given the recent decline in the rate of smartphone upgrades and the decline in demand for smartphones more generally.
This content was originally published here.