Why We Upgrade

“New and improved” may have been the mantra of a bygone era in consumer marketing. But never before have product upgrades come as fast and frequent as they do today.

Why do we go for upgrades when what we have still works fine?

A new study by Mark Forehand of the University of Washington Foster School of Business indicates that our willingness to pay for product upgrades is tied to the extent to which we see improvement in ourselves.

When we feel that we are advancing in some way, we’re more likely to see a product’s enhancements and more willing to fork over money to have them—especially when we identify strongly with the brand.

“Regardless of how much a product has actually improved, marketers recognize that it is the subjective perception of improvement that truly matters,” says Forehand, the Pigott Family Professor in Business Administration and professor of marketing at Foster. “Our research suggests that consumers’ own sense of self-improvement is one factor that can increase perceptions of product improvement and subsequently heighten the desire to upgrade.”

In other words, if we feel improved in some way, we tend to see the same in our cars and athletic shoes and televisions and mobile devices.

Next generations

As many consumer products have traded durability for planned obsolescence, their producers increasingly rely on revenue from product upgrades.

Think of cell phones, whose makers tempt customers annually with the exciting new features of their latest and greatest versions.

Forehand wondered whether our own identity plays a role in our decision to upgrade to  the improved model, or stick with the status quo.

He and co-author Sokiente Dagogo-Jack, an assistant professor of marketing at Boston College (and former Foster doctoral student), designed a suite of experiments around the newest versions of several consumer products. In each, they measured people’s perceptions of self-improvement and the degree to which they identified with the brand to examine how these factors affect product judgments and desire to upgrade.

Upgrade self, upgrade stuff

In one study, Forehand and Dagogo-Jack asked participants to think about how they have improved over the past ten years before viewing information comparing old and new versions of the Apple iPhone. The participants then rated how much they felt the iPhone had improved, their willingness to upgrade and how strongly they identified with the Apple brand.

Those who gave themselves high marks for self-improvement and strongly identified with Apple perceived greater advances between the two iPhone generations and were more willing to buy the latest.

Those with weak bonds to Apple, however, were less likely to see significant improvements and upgrade.

The role of self-esteem

According to Forehand, this behavior is explained by a concept in psychology known as “egocentrism,” the tendency to focus on and evaluate oneself as an anchor for external decisions. Among those external decisions: what brand to buy and whether to upgrade.

The researchers wondered how self-esteem might moderate the same kinds of decisions.

In another experiment, they gave participants an opportunity to boost their self-esteem before asking them to consider their own improvements and assess an upgraded model of athletic shoes. A momentary boost of self-esteem appeared to nullify the tendency to connect self-improvement to product improvement. And it muted the willingness to upgrade.

“When people’s need for self-esteem is satisfied, focusing on self-improvement no longer increases perceptions of product improvement and intentions to upgrade,” Forehand says. “But lack of self-esteem heightens these.”

Power of persuasion

He says that marketers might more effectively persuade people to upgrade by evoking feelings of self-improvement in their advertising.

This was demonstrated in a final experiment involving an altered advertisement for the iPhone 7 (when it was the newest model). Some participants viewed the neutral promotional message: “This is 7.” Others viewed a version that directly sparked thoughts of self-improvement: “You’ve improved in significant ways. This is 7.”

Among the latter group, those who identified strongly with Apple and were motivated to bolster self-esteem were more likely to perceive more improvement in the iPhone 7 and more willing to upgrade.

But directly evoking thoughts of self-improvement is not the only way to improve the odds of selling a product upgrade, Forehand adds. Marketers can also invite comparisons to consumers’ younger, less-evolved versions of themselves. Or they can target people who are in a natural state of feeling improved, such as recent graduates, newlyweds and first-time parents.

“Product upgrades are a key source of revenue in many industries, and marketers face the perennial challenge of determining how to motivate existing customers to upgrade their products,” Forehand concludes. “Our research suggests that evoking thoughts of self-improvement when promoting new versions of products may be an effective means of motivating product upgrades.”

He adds a caveat to consumers: You are more vulnerable when you experience low self-esteem, particularly when evaluating brands with which you identify strongly.

“Egocentric Improvement Evaluations: Change in the Self as an Anchor for Brand Improvement Judgments” was published in the December 2018 Journal of Marketing Research.