Augmented products deliver functional and affective value above and beyond core and expected products, and, in turn, help companies differentiate themselves from competitors and improve market performance. However, there is little to no research on augmented products and their impact on market outcomes. In this study, we focus on augmented products and aim to answer whether design innovation plays a role in their purchase. Specifically, we examine the links from design innovation to perceived value and purchase intention, and then investigate the difference in these links across consumer groups. The empirical findings show that design innovation helps improve perceived value, which also leads to greater purchase intention. However, there are substantial differences in these relationships across groups of consumers, especially between the group called frugal rationalists and the other groups who value hedonic design aspects. Finally, we discuss augmented products as a vehicle to advance related theories and improve managerial insights.

Introduction

Design innovation plays a key role in determining product success and prior research has demonstrated its substantial impact by using a variety of products ranging from core to expected ones (Homburg, Schwemmle, & Kuehnl, 2015; Landwehr, Wentzel, & Herrmann, 2013). We contribute to this stream of research by studying augmented products. Augmentation adds value to core and expected products, making these products more attractive (Kotler & Keller, 2011), which, in turn, helps create competitive advantages and improve sales performance (Ravald & Grönroos, 1996; Storey & Easingwood, 1998). In fact, the stand-alone market for augmented products is already sizable today and is expected to grow continuously. For instance, sales of mobile accessories reached $81.5 billion globally in 2015, and are expected to grow to $101 billion in 2020, according to ABI Research (2015). The size of this market is surprisingly large when compared with Samsung Electronics’ revenues of $170 billion in 2015. Thus, we focus on augmented products and study the effect of design innovation in purchasing them.