Prior research has shown that when making high tech purchase decisions, consumers consider not only the relative advantage afforded by currently available products, but also the relative advantage expected from future generation products. Additionally, empirical evidence suggests that prices for high tech products often decline faster than the technology advances. This chapter takes both these findings into account and investigates the antecedents of expectation formation and how consumer purchase decisions for high- and low-tech products are impacted by asymmetrical rates of technological advance and price decline. Although consumers generally prefer the latest technological generation of a product, level of technological sophistication (high- vs. low-tech), rate of technological change and price decline, and expectations regarding future product introductions, based on familiarity with past product introductions, were found to moderate the effect of technological generation on preference.
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Of the five characteristics Rogers (1995) suggests influence purchase decisions, relative advantage has received by far the most research attention (Gatignon & Robertson, 1991; Harmancioglu, Droge, & Calantone, 2009; Holak, Lehmann, & Sultan, 1987; Olshavsky & Spreng, 1996). Relative advantage reflects the perceived superiority of a product over an incumbent state and is often based on new and/or improved capabilities and features, lower economic costs (price advantage), or the enhanced social prestige garnered from owning the product. For example, all else being equal a consumer is more likely to purchase a PlayStation 4 videogame console than a PlayStation 3 because doing so will afford her a greater relative advantage (better graphics, faster processing speed, etc.).
Such purchase actions are at odds with other researchers who claim that the relative advantage expected from future products also influences consumers’ purchase decisions (Bechwati & Qualls, 2001; Boone, Staelin, & Lemon, 2001; Dhar, 1997; 1996; Dhebar, 1994, 1996; Greenleaf & Lehman, 1995; Grenadier & Weiss, 1997; Holak, Lehman, & Sultan, 1987; Kunz, Schmitt, & Meyer, 2011; Lowery, 1991; Ozer, 2011; Song & Chintagunta, 2003; Winer, 1985). Levinthal and Purohit (1989) and Bridges, Yim, and Briesch (1995) offer analytical and empirical support, respectively, that expectations regarding future product introductions influence current purchase behavior (Banerjee & Sarvary, 2009; Decker & Gnibba-Yukawa, 2010; Roy, Chan, & Cheema, 2007). Guiltinan (2010) combines prior research on economic- and behavioral-based research to model consumer purchase decisions for durable goods that incorporates both rational and irrational consumer behavior (e.g., price and expectations, respectively; Shih & Schau, 2011).