MMRCDISCUSSION PAPER SERIES
No. 405

The effects of industrial design of products on premium price andcustomer satisfaction with maturing of products
Atsushi Akiike
Graduate School of Economics, The University of Tokyo
May 2012

東京大学ものづくり経営研究センター
Manufacturing Management Research Center (MMRC)
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The effects of industrial design of products on premium
price and customer satisfaction with maturing ofproducts
Atsushi Akiike (qiu1chi2@gmail.com)
Graduate School of Economics, The University of Tokyo, Japan

Abstract
In the fields of innovation and product development, the dimensions of industrial design
have not been focused upon. This paper proposes that the appearance and usability of
products influence premium price and customer satisfaction, and these effects increase as
products mature. The mobile phone industry in Japan was chosen as the market in whichto test these hypotheses empirically. The results of this study indicate that the appearance
and usability of products have no effects on premium price, but have positive effect on
customer satisfaction. These effects increase with the maturing of the product.
Keywords: Innovation, Marketing, Industrial design1

The effects of industrial design of products on premium
price and customer satisfaction with maturing ofproducts
Atsushi Akiike (qiu1chi2@gmail.com)
Graduate School of Economics, The University of Tokyo, Japan

Introduction
Recently, Japanese electrical appliance companies have struggled to make their products,
such as TV sets and TV games, highly functional and multifunctional. However, they
have been unsuccessful in achieving differentiation from other firm’s products andsatisfactory performance. There are several reasons for their difficulty in differentiationand poor performance. This paper considers that these problems have arisen because theytend to place too much emphasis on the technical dimension of products and do not
improve the emotional aspect, specifically, the industrial design of their products.
The dimensions of industrial design usually constitute competitive advantage because
they are difficult to imitate. For example, Nintendo’s Wii and Dyson’s vacuum cleaner
succeeded owing to their industrial design. It is important to pay attention to products’
industrial designs. However, existing research has not focused on the dimension of
products. Therefore, this paper will focus on industrial design and explain the effects ofindustrial design on premium price and satisfaction with products.
Hypotheses
Much research has been conducted in the fields of innovation and product development.
Specifically, research involving the maturity of the industry, rate of innovation, and typeof innovation in the market have impacted these fields (Abernathy and Utterback, 1978;
Christensen, 1997).
One study demonstrated that in an industry’s transition from a fluid to a specific stage,
the rate of innovation changes (Abernathy and Utterback, 1978). In the fluid stage, therate of product innovation is higher than that of process innovation. In the specific stage,
the rate of product innovation decreases and becomes lower than that of process
innovation.
Another study demonstrated that in the hard disc drivers (HDD) industry, the shift ofvalue of attribute came out through the hedonic pricing method which analyse theinfluences on the premium price (Christensen, 1997). By 1980, most HDD manufacturers
in the industry had improved their HDD’s areal recording density. However, in 1981 a
disruptive technology change occurred that caused the size of HDDs to shrink. Becauseof this change, most established manufacturers defeated new manufacturers.
However, in the areas of innovation and product development, the industrial design ofproducts has not been given enough weight. Some researchers have analyzed industrial
design from the perspective of innovation and product development (Gemser and2

Leenders, 2001; Gemser et al., 2006; Talke et al., 2009; Yamamoto and Lambert, 1994).
Some studies argue that industrial design includes appearance and usability of products(Gemser et al., 2006) and that the appearance and usability of products contribute toproduct sales (Gemser and Leenders, 2001; Talke et al., 2009). However, studies thatembrace the industrial design perspective do not consider the following points.
The effects of product appearance and usability on premium price and productsatisfaction have not been studied, and the difference in these effects has also not been
analyzed. In addition, longitudinal change of these effects on the appearance and usabilityof products has not been studied. These points should be considered in order to develop a
correspondence relationship between existing research in the fields of innovation andproduct development (Abernathy and Utterback, 1978; Christensen, 1997).
Therefore, in this study, we first investigate how the design aspects of a product(appearance and usability) influence the premium price and satisfaction with the product.
Then the impacts of these influences are analyzed with the increasing maturity of the
product.
A hypothesis concerning the influences of appearance and usability on premium priceis constructed. Christensen empirically shows the shift of value of an attribute through ananalysis of the influences on premium price. The impact of appearance and usability on
premium price would surely increase with the difficulty in differentiation of the products
from the functional aspects, and shift the value of the attribute toward appearance andusability.
Second, the hypothesis on the influence of appearance and usability on customer
satisfaction is developed. Existing research demonstrates the relationship between
innovation and satisfaction with products (Langerak et al., 2004; Stock, 2011). The
impact of appearance and usability on customer satisfaction would increase as is the casein premium price.
Therefore, this paper proposes four hypotheses to demonstrate that the appearance andusability of products have influence on premium price and customer satisfaction, andthese effects increase as products mature. First, the positive effects of a product’s
appearance on premium price increase with the maturing of the product (H1a). Second,
the positive effects of a product’s usability on premium price increase with the maturingof the product (H1b). Third, the positive effects of a product’s appearance on satisfaction
with the product increase with the maturing of the product (H2a). Fourth, the positiveeffects of a product’s usability on product satisfaction increase with the maturing of the
product (H2b).
MethodThe mobile phone industry in Japan was chosen as the market in which to test thesehypotheses empirically. This choice was made because the mobile phone industry has
many models of mobile phones and the speed of product evolution is high. The highspeed of product revolution is very important in terms of investigating the maturing
process of products (Fine, 1998).
First, we briefly review the Japanese mobile phone market. Mobile phones are widely
diffused in Japanese society. The current number of mobile phone users is over 100
million, which shows that almost all citizens have mobile phones. The Japanese mobile3phone industry consists of telecommunications carriers and mobile phone manufacturers.
NTT, Docomo, AU, and Softbank hold most of the market share.

3%
NTT DOCOMO

21%
48%

AU
SOFTBANK

28%

Other
Source: Nikkei shijyou senyuritu 2012
Figure 1 – The market share of mobile telecommunications carriers in 2010

There is severe competition among several major mobile phone manufacturers such as
Sharp, Panasonic, and Fujitsu. Unlike in other countries, in Japan, telecommunications
carriers have considerable commitment and cooperation with mobile phone
manufacturers in new product development, and both telecommunications carriers andmobile phone manufacturers are responsible for the development of the mobile phone.
Due to these distinctive characteristics of the industry, cutting-edge technologies havebeen introduced to the mobile industry (including cameras and electronic payment) with
rapid market introductions occurring about three times per year. In 2010, over 50
different models were brought to market. However, by the late 2000s, most Japanese
mobile phones could not be differentiated by functional aspects and were equipped withanalogous features. In this paper, we further investigate the Japanese mobile phonemarket.

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Homogeneity

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

CameraMusic
TV
Electronic
Over 5 million
pixelsOver 3 inches

2005

2006

2007

2008

2009

2010

Note: Homogeneity= the number of models having the function sold in April between
2005 and 2010/ the number of models sold in April between 2005 and 2010

Source:ke-taihakusyo2006-2012

and

the

Home

page

(HP)

of

each

mobiletelecommunications carriers.
Figure 2 – Trend of homogeneity

This paper analyzes the characteristics of mobile phones that were sold in April
between 2005 and 2010. The period between 2005 and 2010 is divided into two sections
to analyze the change in effects based upon the maturing of mobile phones. Section 1
ranges from 2005 to 2007, and Section 2 ranges from 2008 and 2010. One hundred andthree and 185 types of mobile phones were available during Section 1 and Section 2,
respectively.
To test the hypotheses, the model included appearance and usability of products as
independent variables and premium price and satisfaction with products as dependent
variables. In addition, model month (the number of months from each model’s
introduction to April each year), year when each model was released, career of eachmodel released, and each model’s functions (such as music and camera functions) were
included as control variables.
Information about price was collected from the Japanese website ‘Ke-tai watch’. This
site records each model’s price every week. Information regarding satisfaction withproducts and appearance and usability of products was collected from the Japanesewebsite ‘Kakaku.com’ and was evaluated with a 5-point scale by users of each model.
Information about control variables was collected from Ke-tai hakusyo, a Japanese
mobile phone data book that has been published every year since 2005. Table 1 shows thevariables for this study.
Table 1 – Variables for regression analysis
Name
Variable detail

Data Collection

Dependent

From Ke-tai watch

Price

Price per April

5variables

Independent

Satisfaction

Rating from 0 to 5 by users

From Kakaku.com

Appearance

Rating from 0 to 5 by users

From Kakaku.com

Usability

Synthesis variable Rating from 0 to 5
by users regarding: button operation,
response, character conversion, menu
screen (Cronbach’s alpha is over 0.8
at all year)

From Kakaku.com

CameraCamera’s pixel per models

From Ke-tai hakusyo
2005-2011

Whether the model has music
function

From the HP of eachTV（dummy）

Whether the model has TV function

From Ke-tai hakusyo
2005-2011

Electronic
payment（dummy）

Whether the model has electronic
payment function

From the HP of each

Display size(inches)

Display size of models

From Ke-tai hakusyo
2005-2011

Models’months old

The number of months from eachmodel’s introduction to April eachyear

From Ke-tai hakusyo
2005-2011

au（dummy）

Models were released by au

From Ke-tai hakusyo
2005-2011

Softbank（dummy）

Models were released by Softbank

From Ke-tai
hakusyo2005-2011

2005（dummy）

Models were released in 2005

From Ke-tai watch

2006（dummy）

Models were released in 2006.

From Ke-tai watch

2008（dummy）

Models were released in 2008.

From Ke-tai watch

2009（dummy）

Models were released in 2009.

From Ke-tai watch

variables(pixel)Music(dummy)Controlvariables6

telecommunication
s carriers

telecommunication
s carriers

To assess the effects of product appearance and usability on premium price andsatisfaction with products, four multiple regression analysis models were built. The firstmodel analyzes the effects of appearance and usability of products on premium price inSection 1. The second model analyzes the effects of appearance and usability of products
on premium price in Section 2. The third model analyzes the effects of appearance andusability of products on satisfaction with products in Section 1. The fourth model
analyzes the effects of appearance and usability of products on satisfaction with products
in Section 2.
Findings
Table 1 and Table 2 show demonstrational results of the four models. In this section,these results were interpreted for implications (results of these models are robust even if
control variables were eliminated).
Table 2 – Results of the regression analysis
Model 1Model 2Model 3Model 4

IndependentAppearance

0.003

0.125**

0.209***

0.262***

variables

Usability-0.1180.018

0.739***

0.778***

Music

0.002

-0.0180.189**

0.019

Camera (pixel)

0.202*

0.359***-0.183**

-0.08

TV

0.245***

0.195***

0.099

0.069

Electronic payment

-0.03

0.034

0.104

0.046

Display Size (inches)

0.066

0.127**-0.158**-0.095*

Softbank-0.294***0.479***-0.136**-0.038au-0.276***-0.321***-0.0809

0.039

Models’ months old-0.315***-0.078*

0.039

-0.04

2005

0.277***

0.233***

2006

0.264***

0.092

Controlvariables

2008

0.178***-0.011

2009

0.094*-0.036

Adjusted R2

0.349

0.716

0.703

0.79

F–value

5.531***

39.810***20.942***58.684***

N

103

185

103

185

*p ≤ 0.1 **p ≤ 0.05 *** p ≤ 0.01

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First, H1a and H1b were analysed. H1a and H1b were not supported. This means thata product’s usability has no effect on premium price. A product’s appearance has apositive effect on premium price in the second model, but it has no effect on premium
price in the first model.
In contrast, the results supported H2a and H2b. The effects of appearance and usabilityof products on product satisfaction were statistically significant and highly positive inboth the third model and fourth model, and their effects in the fourth model were higher
than those in the third model. This means that these effects increased with the maturing of
the product.
These results represent the characteristics of appearance and usability of products.
There were no clear criteria to evaluate appearance and usability of products because
these evaluations mainly depend on individual taste. This is why appearance and usabilityof products do not affect premium price, but do affect satisfaction with products. Most
importantly, product usability is perceived after product use, so it has no effect onpremium price but has a significant effect on product satisfaction.
The explanation for the increase in influence of appearance and usability on productsatisfaction can be summarized as follows. For appearance, the influence on satisfaction
with products increases in Section 2 because, compared to Section 1, people can choose
from a larger variety of products with satisfactory functions. Compromising in usability
can be seen in Section 1 due to the limited product functions. On the other hand, in
Section 2, the difficulty in differentiating the products from the functional aspect led tohigher expectation for product usability and a greater negative impact on productsatisfaction when the user experience of the product was unsatisfactory.
The positive impact of appearance and usability on customer satisfaction would
increase with the maturity of the products for the reasons mentioned above.
Conclusion
The results of this study indicate that product appearance and usability have no effect onpremium price, but has positive effect on customer satisfaction. The effect on productsatisfaction increases along with the maturity of the product. Existing researchdemonstrates that customer satisfaction has positive effects on market share and brandloyalty (Langerak et al., 2004; Stock, 2011). Indeed, Fujitsu may improve their shipment
volume by improving their products’ usability. In Section 2, Fujitsu’s average usability of
products is higher than that of mobile phones of other manufacturers.

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The volume of shipments(Million)

14

60

12

50

10

40

Total
Sharp

8
30
6

Panasonic
NEC

20

4

Toshiba
Fujitsu

10

2

0

0
2005

2006

2007

2008

2009

2010

Figure 3 - The volume of shipments by mobile phone manufacturers
Source: Nikkei shijyou senyuritu 2005-2012

These results indicate that, for appearance and usability of the product, Christensen’s
disruptive innovation framework is realized in the difficulty in differentiation of the
products from functional aspects. However, these elements have positive effects oncustomer satisfaction, not premium price. This finding is one of the contributions
provided by this paper. Existing research shows that the rate of product innovation
decreases with the maturity of products. However, results of the current study indicatethat the rate of product innovation from the industrial design perspective, as opposed tofunctionality, may improve. In fact, one study suggests the possibility of the existence ofinnovation in industrial design following functional innovation (Walsh, 1994).
This research also demonstrates that product usability contributes to a firm’s
competitiveness. Therefore, the present study has meaningful academic implications.

Illustration 1-New model of innovation considering the industrial design’s dimension

9For management practice, business managers should improve the appearance andusability of products, not for premium price but rather for user satisfaction, and continue
to lay emphasis on maturing products. These results also show that firms should focus on
appearance and usability and satisfaction with products.
There are some issues in this study resultant from data collection. For example, thisresearch investigates only the mobile phone industry, the investigation period is short,and the reliability of the data is not very high. Future research should solve these
problems and conduct a more generalized and precise demonstration. In addition, thepresent research does not focus on how firms develop products with superior industrial
design. This theme is very important and should be analyzed. While analyzing how firms
develop superior industrial design products, according to Clark and Fujimoto (1991) andFujimoto (1991), we need further discussion regarding the role of product managers andintegration of organisations to investigate the optimal product development for prominent
design.
Finally, the contribution of the present study will become greater in the future because
further emphasis on industrial design is expected.

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