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EMAC 2022 Annual

Are you selling me access to my property!? How perceptions of betrayal may undermine internal product upgrades

Published: May 24, 2022


Janina Garbas, University of Passau; Sebastian Schubach, University of Passau; Martin Mende, Florida State University; Maura Scott, Florida State University; Jan Schumann, University of Passau


Physical products (e.g., cars) increasingly evolve into dynamic service platforms that allow for customization through fee-based activation of restricted add-on features. We refer to this phenomenon as “internal product upgrades”. Drawing on normative expectations literature, we examine pitfalls of internal product upgrades that marketers need to understand. Seven experimental studies in two contexts (consumer-electronics, automotive) reveal that consumers respond less favorably to internal (vs. external) product upgrades. The analyses show that perceived betrayal resulting from increased feature ownership perceptions drives the effects. Moreover, we identify four boundary conditions. The negative effects are attenuated when (1) the firm (vs. consumer) executes the upgrading, (2) upgrades are offered at a discount, and (3) consumers upgrade an intangible (vs. tangible) feature. Finally, consumers react less negatively when (4) the base product is less relevant to their self-identity.