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Selling the Premium in the Freemium: Impact of Product Line Extensions

Dr. P.K Kannan, Professor, McDonough School of Business, Georgetown University

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Consumers frequently use technology products, such as smartphones or laptop computers, in places where their usage can be observed by others. Knowing that they will be observed, consumers may hold their smartphone in their hand to make themselves appear more socially connected when they are alone in a public place, yet place their smartphone face down on the table to let others know they are being attentive when they are with a group. We propose that because technology products themselves have different associations (e.g., a smartphone is associated with affiliation, while a laptop is associated with achievement), their usage will be interpreted differently in the same social situations. In a series of five studies, we find that the inferences others make about consumers using technology products vary systematically based on the product’s usage associations, how the consumer is using the product, and whether the consumer is alone or in a group. Using a technology product associated with affiliation, such as a smartphone, increases the perceived social connection of a consumer who is alone but decreases the perceived social connection of a consumer who is part of a face-to-face group. In contrast, when a consumer uses a technology product not associated with affiliation, such as a laptop, we do not observe this social context-dependent reversal in inferences about social connection.

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Embracing the Experiential: Reminders of Mortality Increase Consumer Preferences for Experiences Over Material Goods

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We analyze multi-market interactions between firms which must invest limited budgets in value (surplus) creation as well as in competitive rent-seeking activities. Firms are differentiated on a line segment and compete for multiple markets/prizes which differ in the relative effectiveness of each firm's competitive rent-seeking spending. Each firm faces a dual trade-off: First, they must choose how much to invest in value creation versus to spend in rent-seeking competition. Second, they must decide on how to allocate resources across the different markets. Counter to what one might expect, greater firm differentiation actually intensifies the competition in the middle market.

Image AddedGeneral Evaluability Theory

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A central question in psychology and economics is the determination of whether individuals react differently to different values of a cared-about attribute (e.g., different income levels, different gas prices, and different ambient temperatures). Building on and significantly extending our earlier work on preference reversals between joint and separate evaluations, we propose a general evaluability theory (GET) that specifies when people are value sensitive and when people mispredict their own or others’ value sensitivity. The GET can explain and unify many seemingly unrelated findings, ranging from duration neglect to affective forecasting errors and can generate many new research directions on topics ranging from temporal discounting to subjective well-being.

Image AddedNow You See Them, Now You Don’t: What Happens When Person Brands become Highly Visible Strategic Employees?

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