Product positioning decisions are important strategic decisions managers make. Will the firm develop "high-end" products, priced above the average product in the marketplace or "low-end" products, priced lower than the average product in the market? We theorize and empricially investigate a high-end bias: the tendency to favor high-end over low-end projects in the absence of objective reasons for doing so. We conducted experimental investigations of managers' explicit versus implicit preferences for high- versus low-end. The core of these experimental studies is the Implicit Association Test (IAT), which analyzes the relative association strength between two constructs in the participant's mind. We find that (1) decision makers implicitly, and without objective justification, prefer high-end over low-end innovation projects, (2) decision maker's implicit high-end bias affects their explicit decisions, and (3) firms introduce more high-end than low-end innovations despite no advantage in revenue.
Contact Person: Dr. Fabian Gaessler