Steven M. Shugan
Although developing new products is often essential for the survival of a seller, it is very costly and risky to continuously launch new products or replace established products with new ones. Sometimes, a less risky alternative is to modify or enhance the established existing base (or core) product with upgrades, add-ons, extras, and accessories. This chapter reviews the use of these product enhancements to modify established base products to create new consumer choices. Although the literature often uses these terms interchangeably, it is useful to distinguish between them because they can perform different functions. Therefore, the authors provide definitions and examples of each with explanations of how they are different. They discuss the strategic uses of these product enhancements, including signaling, market segmentation, channel management, and deterrence of competition. The chapter concludes with opportunities for future research.