Abstract

In making replacement decisions, consumers compare the adequacy of the current version in satisfying needs with the enhanced benefits of an upgrade. In addition, replacement decisions are hindered by the mental costs associated with taking an existing product out of commission while it is still functional. To make continual product enhancement successful, manufacturers should deliberate consumer replacement decisions and strategically manage upgrades. This study focuses on the issues of firm introductory strategies of product upgrades, including the market status of the prior generation product with each subsequent introduction, frequency and timing of introduction, and their impacts on consumers' product replacement decisions. The results show that both of the deletion of the prior generation product and introductory timing of product upgrades have positive effects on the marginal benefits of the new version. On the contrary, the introductory frequency of product upgrades has a negative effect on it. The marginal benefit of the new version has positive relationship with consumers' replacement intentions.