The concept of “loss aversion” fuels buyer resistance because consumers are more sensitive to their losses compared to their potential gains. According to the reading, loss aversion leads people to value products they already possess more than those they don’t have because they magnify the effects of the potential losses. Therefore, they are more likely to undervalue the benefits of a new product because they are comparing it relatively to what they already have. This heightened sense of gains of their current product and the losses from switching to a new product makes consumers wary of changing their behavior to adopt a new product. Not only are consumers more likely to value what they currently have rather than the value they could obtain, loss aversion makes it so that the potential gains need to be substantially higher than the potential losses in order for it to seem worth it from the perspective of a consumer.
Product managers can leverage this knowledge to facilitate the adoption of new features by making sure the potential gains of their new product heavily outweighs the potential losses and by minimizing the potential losses. First, product managers need to make sure their product actually offers a substantial improvement to consumers. If the product is only a slight improvement, consumers will not see the gain as enough motivation to switch their behaviors and endure the losses of their current benefits. Next, product managers can minimize losses by reducing the amount of behavioral changes demanded from consumers. According to the article, the most successful new products offer great benefits while requiring minimal behavioral changes because it will best combat buyer resistance. Therefore, given the proven concepts of loss aversion and the endowment effect, product managers must design their new offering in a way that highlights the gains enough considering consumer biases towards their current product and minimize potential losses by reducing the need for behavioral changes.
