The Effect of New Product Features on Brand Choice

Companies often introduce new product features in order to differentiate their brands and gain a competitive advantage. In this research we investigate factors that moderates the impact of a new feature on brand choice. Building on two principles, referred to as multiattribute diminishing sensitivity and performance uncertainty, we 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 we show that a new feature adds greater value and increases the choice share of brand more when (1) the brand has relatively inferior existing features, (2) the brand is associated with lower (perceived) quality, (3) the brand has a higher price, and (4) the brand has both higher price and higher quality. The results also suggest that (1) the addition of a new feature reduces buyers’ price sensitively for lower quality but not for higher quality brands, and (2) multiattribute diminishing sensitivity is a more important moderator of the effect of new features than performance uncertainty. We discuss the theoretical and practical implications of the findings.