Consumer Purchase Decisions Under Asymmetrical Rates of Technological Advance and Price Decline

Consumer Purchase Decisions Under Asymmetrical Rates of Technological Advance and Price Decline

Derrick S. Boone (Wake Forest University, USA)
Copyright: © 2012 |Pages: 11
DOI: 10.4018/jsds.2012040102
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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 research takes both these findings into account and investigates consumer purchase decisions for high and low tech products under 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 were found to moderate the effect of technological generation on preference.
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Literature Review

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 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, a consumer is more likely to purchase an iPad 2 than the original iPad because doing so will afford her a greater relative advantage (e.g., thinner, lighter, faster processing speed, etc.) and the attendant social prestige that results from owning the latest generation of a high tech product.

Such purchase actions, however, are at odds with other researchers who claim that the relative advantage expected from future products also influences 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, & Anton 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).

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