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.
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