Abstract
This study employs survey questionnaire data from the athletic footwear context to clarify how design-based differentiation effects consumers’ perceptions of the most significant driver of product performance: pricing. Specifically, we asked highly involved respondents to rate the User Value; Social Value, Significance Value, Utility Value, Emotional Value, and Spiritual Value imbued by a specialized Trail Runner shoe, a technically sophisticated Lightweight Racer, and a basic Value Runner alongside their Willingness to Pay (WTP) operationalized through the Van Westendorp Price Sensitivity Meter (PSM). Rather than asking consumers for a single, specific price, the PSM provides a more realistic range of indicators of WTP including the ‘floor’, beneath which a product would be perceived as “Too Cheap”, causing consumers to question its quality, and ‘ceiling’ above which the offering is seen as “Too expensive”. As product markets undergo fundamental changes to how consumers think, envision, and co-design the value of new products and systems our findings clarify the link between design-led innovation and strategy by highlighting the complex relationship between consumers’ WTP and User Value. In particular, our results show that while the specialized Trail Runner was perceived to have the highest price ‘ceiling’ by respondents, it simultaneously had the lowest price ‘floor’. That is, not all consumers agreed that the artifact’s high levels of Social Value, Significance Value, and Utility Value was suitable for them, but those who did were willing to pay much higher prices for the offering in order to obtain that value.
Keywords
Product Design, Design-led Innovation, Design-based Differentiation, User Value
DOI
https://doi.org/10.21606/iasdr.2023.128
Citation
Parkman, I.(2023) Raising the ceiling: the impact of design-based differentiation on product pricing, in De Sainz Molestina, D., Galluzzo, L., Rizzo, F., Spallazzo, D. (eds.), IASDR 2023: Life-Changing Design, 9-13 October, Milan, Italy. https://doi.org/10.21606/iasdr.2023.128
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
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Raising the ceiling: the impact of design-based differentiation on product pricing
This study employs survey questionnaire data from the athletic footwear context to clarify how design-based differentiation effects consumers’ perceptions of the most significant driver of product performance: pricing. Specifically, we asked highly involved respondents to rate the User Value; Social Value, Significance Value, Utility Value, Emotional Value, and Spiritual Value imbued by a specialized Trail Runner shoe, a technically sophisticated Lightweight Racer, and a basic Value Runner alongside their Willingness to Pay (WTP) operationalized through the Van Westendorp Price Sensitivity Meter (PSM). Rather than asking consumers for a single, specific price, the PSM provides a more realistic range of indicators of WTP including the ‘floor’, beneath which a product would be perceived as “Too Cheap”, causing consumers to question its quality, and ‘ceiling’ above which the offering is seen as “Too expensive”. As product markets undergo fundamental changes to how consumers think, envision, and co-design the value of new products and systems our findings clarify the link between design-led innovation and strategy by highlighting the complex relationship between consumers’ WTP and User Value. In particular, our results show that while the specialized Trail Runner was perceived to have the highest price ‘ceiling’ by respondents, it simultaneously had the lowest price ‘floor’. That is, not all consumers agreed that the artifact’s high levels of Social Value, Significance Value, and Utility Value was suitable for them, but those who did were willing to pay much higher prices for the offering in order to obtain that value.