Eliminating Managerial Bias for Developing Premium (Versus Economy) Products

Abbie Griffin, The University of Utah

Some customers are happy purchasing premium products, even though they cost more. However, other customers are price-driven and will not consider premium products. Indeed, many argue that the "Walmart factor" has overly sensitized both consumers and B2B buyers to high prices. One would think, then, that firms would be focusing more on developing "low-end" innovations to fit the needs of economy buyers, especially as lower-priced products could allow firms to better penetrate huge markets in developing countries that inherently cannot afford premium end products. However, research finds that managers making product development selection decisions are biased against low-end, low-priced economy projects in favor of premium, high-priced projects, even when there is no economic benefit to them. Abbie Griffin will discuss these findings and will suggest actions managers can take to overcome these biases.

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