A Real Options Approach to Analyze Consumers’ Delayed Purchasing Behavior for Perishable Technology Products: The Example of 4G Mobile Phones
Date Issued
2011
Date
2011
Author(s)
SUN, YANGHARN
Abstract
Consumers often face the dilemma of choosing between keeping the existing products and upgrading to a new version. According to the curve of adoption of innovations (Rogers, 1962), most of consumers tend to defer their purchase of new high-tech products, however, Rogers does not explain the reason why some consumers defer shorter time, others defer longer. Different from the arguments regarding “decision deferral” which appear in the prior literatures discussing consumer behavior, this study applies the real options concept (i.e. Option to Defer) to analyze how consumers’ perceived uncertainties will affect their purchase delay of new perishable technology products. The 4G mobile phone is taken as an example to proceed with the experimental research by using LISREL 8.8. The major findings prove that the consumer who perceives high technological uncertainty, market uncertainty, and competitive volatility, will also thinks highly of “Wait & See” strategies, and thus intends to increase the time length of purchase delay for a 4G mobile phone. In addition, the factors, expected price decreasing, switching costs, and group influence are discussed as control variables; the two moderating variables, risk tolerance and consumer innovativeness, are also proved to indirectly reduce the time length of consumers’ intention of purchase delay for a 4G mobile phone.
This research contributes to managerial implications in several points. There are only a few literatures implementing the real options concept in the marketing sphere, most of which, however, analyze the firms’ options. This study is the vanguard of using the concept of Option to Defer to analyze the consumers’ options. The theoretical basis is found in the consumer’s perception of time value under uncertainties, which accounts for the different time length of consumers’ purchase delay for innovations. This research result makes up the deficiency of Innovation Adoption Curve of Rogers (1962); the consumer’s perception of uncertainties explains why different groups of people in Rogers’ Innovation Adoption Curve (1962) adopt the innovations in different timing.
Subjects
Real Options
Option to Defer
value of “Wait and See
” time length of purchase delay
uncertainties
consumer innovativeness
consumer risk tolerance.
SDGs
Type
thesis
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