This paper is based on the first two authors' dissertation. We thank participants of EMAC 2009, AMA 2009, the JPIM Editor, and the anonymous reviewers for their valuable comments.
How Do Consumer Characteristics Affect the Bias in Measuring Willingness to Pay for Innovative Products?†
Article first published online: 25 JUN 2013
© 2013 Product Development & Management Association
Journal of Product Innovation Management
Volume 30, Issue 5, pages 1042–1053, September 2013
How to Cite
Hofstetter, R., Miller, K. M., Krohmer, H. and Zhang, Z. J. (2013), How Do Consumer Characteristics Affect the Bias in Measuring Willingness to Pay for Innovative Products?. Journal of Product Innovation Management, 30: 1042–1053. doi: 10.1111/jpim.12040
- Issue published online: 5 AUG 2013
- Article first published online: 25 JUN 2013
Getting the price right is essential for successful new product introductions. An accurate estimate of consumers' willingness to pay is a crucial part of this task. Measurement of willingness to pay for innovations, however, often yields biased results. In this paper, we investigate consumer-related characteristics and motives that might underlie this bias. Drawing on the elaboration likelihood model, we develop a conceptual model to identify consumer characteristics relevant for preference measurement for innovative products. In doing so, two main factors that potentially influence hypothetical bias are distinguished: ability and motivation. Our conceptual discussion and empirical results demonstrate that the validity of willingness to pay statements is higher among consumers who show a high ability to assess the new product's utility and who are truly interested in purchasing the new product. Counter to intuition, willingness to pay statements from innovators, consumers with good product category knowledge, or consumers who perceive the new product to be highly innovative are relatively more biased and should be interpreted with caution.
This research is among the first to look at consumer characteristics rather than methodological issues when it comes to measuring consumer willingness to pay for innovative products. Our conceptual discussion and empirical examination of the drivers of hypothetical bias can be used to refine the validity of the results of the direct willingness to pay approach. These findings should help improve new product pricing surveys and open new avenues for research in measuring consumer preferences.