The Effect of New Product Features on Brand Choice

Abstract

Companies often introduce new product features to differentiate their brands and gain a competitive advantage. The authors investigate factors that moderate the impact of a new feature on brand choice. Building on two principles, multiattribute diminishing sensitivity and performance uncertainty, they propose that the characteristics of the products to which new features are added are important determinants of the impact of these features on sales and market share. Specifically, in six studies, they show that a new feature adds greater value and increases the choice share of a brand more when the brand (1) has relatively inferior existing features, (2) is associated with lower (perceived) quality, (3) has a higher price, and (4) is both high-priced and high-quality. The results also suggest that the addition of a new feature reduces buyers’ price sensitivity for low-quality, but not for high-quality, brands and that multiattribute diminishing sensitivity is a more important moderator of the effect of new features than performance uncertainty. The authors discuss the theoretical and practical implications of the findings.