Innovations commonly involve changes to iterated market offerings (e.g., new games, car models, film sequels). To better understand consumer iteration responses, the authors develop and test a theoretical framework grounded in (1) prior innovations serving as reference states (comparators) for later innovations and (2) consumer desires for both comfort and stimulation. In Study 1's online game, prior innovations and loss aversion (greater loss than gain impact) moderate evaluations of current innovations, whereby an introduction-weaker-stronger innovation sequence (Periods 1–3 of four periods) generates more entertainment than an introduction-stronger-weaker sequence because the former's weak-opening-then-rise does less harm than the latter's strong-opening-then-drop. Study 2 replicates Study 1 and shows that an introduction-weaker-weaker sequence produces enough habituation and diminishing negative returns to outperform an introduction-stronger-weaker sequence at Period 4. Study 3 offers marketplace corroboration with a film industry test in which minor (fewer) innovations perform better (e.g., sales, return on investment) earlier in franchises, whereas major (many) innovations perform better later, thereby reconciling prior research's opposing prescriptions for the use of major versus minor sequel innovations. The framework and results implicate carefully sequenced innovations for managing consumer iteration responses, including the possibility of interspersing weaker/minor innovations among stronger/major innovations.
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