London Business School Centre for Marketing, Working Paper No. 08-101
Add-on products and features, such as browser plug-ins and stereo equipment designed specifically for iPods, can enhance many consumer goods. But consumers view certain types of add-ons as more valuable than others. This study found that add-ons that provide new functionality for existing products — a tripod for a camera, for example — have a positive effect on perceived value. Those that simply improve existing features, such as a software upgrade, have a negative impact on the perceived value. These findings suggest that marketers should pay particular attention to product positioning when introducing add-ons in the retail market.
Product enhancements must provide a clear value proposition to consumers, otherwise companies risk hurting their product’s perceived value.