Product Conceptual Systems: Toward a Cognitive Processing Model

Market participants form conceptualizations of the products exchanged within product markets. Strategy scholars have begun to investigate how these product conceptual systems influence firm strategic behavior. Much of this work characterize these concepts as categories and theorize that the strategic implications derive from the potential penalties of not fitting into a category. This view has limitations in that it does not fully address the other cognitive tasks that concepts perform as well as other system-level characteristics of the conceptual systems. This chapter addresses these limitations by framing the use of concepts as part of the interpretive processes that enable market exchange. It develops a system-view of product concepts and then shows how the structure of the product categorical system influences the interpretation of product concepts. It introduces new mechanisms centered on cognitive processing that influence strategic action within product markets.