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Same or Different? An Aesthetic Design Question

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  • Krista J. Li
  • Yan Liu

Abstract

Should brands selling status goods design high‐end and low‐end products to look the same or different? In this paper, we study how brands make this aesthetic design differentiation decision. We first empirically analyze the impact of a brand’s aesthetic design differentiation on consumers’ preferences for the brand’s products using seven years of data of a status good (i.e., cars). We find that consumers prefer high‐end products of a brand to look more differentiated but prefer low‐end products of the brand to look less differentiated, which seems to present brands a product design dilemma, that is, neither design unification nor diversification within a brand can enhance the appeal of the brand’s high‐end and low‐end products at the same time. Based on this finding, we set up a game‐theoretic model to analyze brands’ equilibrium design strategies. Interestingly, we find that the opposing preferences for design differentiation can lead brands to choose asymmetric design strategies, that is, one brand unifies design while another brand diversifies design, which can be a win–win outcome. We also give conditions where both brands unify design or both brands diversify design while the latter can be a prisoner’s dilemma. Furthermore, vertical differentiation (e.g., in brand strength) between brands affects the profitability of design diversification or unification. In addition, we show that the aesthetic design decision has important implications on how brands should set prices and functionalities of products and how much brands should invest in brand‐building activities (e.g., advertising).

Suggested Citation

  • Krista J. Li & Yan Liu, 2019. "Same or Different? An Aesthetic Design Question," Production and Operations Management, Production and Operations Management Society, vol. 28(6), pages 1465-1485, June.
  • Handle: RePEc:bla:popmgt:v:28:y:2019:i:6:p:1465-1485
    DOI: 10.1111/poms.12994
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    Cited by:

    1. Rajesh Bagchi & Sung H. Ham & Chuan He, 2020. "Strategic Implications of Confirmation Bias‐Inducing Advertising," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1573-1596, June.
    2. Migchelbrink, Koen & Raymaekers, Pieter, 2023. "Nudging people to pay their parking fines on time. Evidence from a cluster-randomized field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    3. Yuetao Gao & Norman Johnson & Bo Shen & Yinliang (Ricky) Tan, 2023. "Benefits of sourcing alternative inputs of manufacturers for suppliers," Production and Operations Management, Production and Operations Management Society, vol. 32(6), pages 1880-1894, June.
    4. Yue Yuan & Mary E. Deily & Yuliang Yao, 2022. "Willingness to Pay for Status Signals in Online Luxury Markets," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 668-680, February.
    5. Juan Bu & Eric Yanfei Zhao & Krista J. Li & Joanna Mingxuan Li, 2022. "Multilevel optimal distinctiveness: Examining the impact of within‐ and between‐organization distinctiveness of product design on market performance," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1793-1822, September.

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