Spending propensity and price perceptions

ABSTRACT

This article presents a systematic investigation of how Spending Propensity moderates consumers’ perceptions of prices. Results from three studies are presented. Studies 1 and 2 reveal that, in the absence of any external cues, consumers who are predisposed to spending freely evaluate a posted price more favorably than those who are not. Such consumers also report anticipating less pain associated with spending than those who are not inclined to spend. Additionally, Study 2 informs that simple price communication tactics, without any real reduction in price, may be effective at mitigating the pain felt among those who are less inclined to spend. Furthermore, such tactics are capable of reducing, and even reversing, the gap between those who are not predisposed to spending and those who are. Finally, Study 3 explores how spending propensity moderates consumers’ perceptions of a discount.     

Correlates of first‐brand loyalty

A mail survey of British supermarket customers shows that the factor most strongly associated with claimed brand loyalty is household income Brand loyal customers also claim to spend more, are more concerned about quality and less about price, are slightly more store loyal and make more use of large out‐of‐town stores Brand loyalty is also related to age; those aged under 25 years and 65 + years are less loyal

There is little difference between those who are primarily loyal to store brands and those who are primarily loyal to manufacturer brands, and there is little evidence that store patronage is raised by loyalty to store brands     

Does country matter in urban organic food products consumption?

The main goal of this paper is to evaluate the possibility of finding international consumer segments in the organic food product (OFP) market. For that purpose, the power of country of residence in discriminating between urban frequent, occasional and non‐consumers of OFP was evaluated; and the most appropriate international segmentation bases for that market were studied. In order to achieve this goal, a survey of organic food consumers from Lisbon (Portuguese) and Berlin (German) was implemented through a structured questionnaire. Upon this, factorial and discriminant analysis was applied to the data. The results highlight the significance of the “Country” variable when distinguishing between groups of urban OFP consumers and non‐consumers as well as between frequent and occasional urban OFP consumers. The different levels of OFP consumption are mostly explained by the level of declared “OFP knowledge”. Therefore, we can conclude that in order to increase the consumption of OFP and dilute the effect of the country variable and to be able to work with international segments, marketers should aim to increase awareness and knowledge on these products. It is important to mention that this study was based on a non‐probabilistic sample and, consequently, generalizations of its conclusions must be made with care.     

Socio‐demographic determinants of gambling participation and expenditures: evidence from Malaysia

This study examined the socio‐demographic determinants of participation and expenditure decisions on gambling among non‐Muslim households in Malaysia using data from the 2005–2006 Malaysian Household Expenditures Survey. Heckman's sample selection analysis was used to obtain consistent (unbiased) empirical estimates for the regression equation of gambling expenditures in the presence of censoring (observed zeros) in the dependent variable. Marginal effects were also calculated to further explore the effects of socio‐demographic variables on the probability and levels of gambling expenditures. The results indicated that non‐Muslim households in Malaysia who are more likely to participate and spend more in gambling include Chinese, affluent, male‐headed, younger and non‐white collar households. Specifically, households of Chinese descent have higher gambling probabilities and expenditures than Indians and those of other ethnic backgrounds. While education reduces and age increases the likelihood and expenditures of gambling among Chinese households, these effects are non‐extant for Indians and other ethnic groups. Higher income and male‐headed households were more likely to partake and have higher expenditures in gambling among all non‐Muslim ethnic groups. Finally, Chinese and Indian households headed by a white‐collar worker have lower gambling likelihoods and unconditional expenditures than their blue‐collar cohorts. Based on these results, several anti‐gambling policies were suggested to target those more likely to participate and spend more in gambling activities.     

Do people with disabilities believe the ADA has served their consumer interests?

In recent years, numerous changes in the retail sector have been made to create accessibility for people with disabilities and to establish compliance with the Americans with Disabilities Act (ADA). This paper examines the responses of 1,000 people with disabilities taken from the 1998 National Organization on Disability/Harris Survey of Americans with Disabilities. These data enable us to examine whether the consumer interests of people with disabilities have been served by this legislation from the perspective of the people whom the law was designed to protect. The findings indicate that (1) respondents who are aware of the ADA are significantly more likely than those unaware of the ADA to believe that things have gotten better since the enactment of the ADA; however, a clear majority of those who are aware still believe that the ADA has made no difference; (2) respondents believe perceived access is related to disabilities and to environmental factors; (3) respondents who perceive fewer access problems spend more time in the marketplace; and (4) greater life satisfaction is related to greater perceptions of marketplace access and more frequent participation in the marketplace. In general, the results show that respondents believe their consumer interests have been served by the ADA, but the results also show there is more to be done.     

Making Health Care More Affordable Through Health Insurance Finance Reform

The way that we finance health insurance today is both unfair and inefficient. The tax code subsidizes the most expensive employment-based policies while penalizing those who buy insurance on their own or choose more basic policies. By reforming this system, we can both make health care more affordable for millions of people and get higher-value care for the money that we spend. These reforms should be coupled with policies to ensure that basic private insurance is affordable for everyone, including those with chronic health conditions or low income, and to ensure that patients and physicians have the tools that they need to make well-informed decisions. JEL Classification I11     

Multiagent Enterprise Modeling

In this article, we study the dynamics of business processes and interactions between business units in an enterprise, and to this end, we developed a framework for enterprise modeling using the process hierarchy approach. We developed and implemented a multiagent information system (MAIS) for the supply chain network for capturing both the structure and the processes of an enterprise. The MAIS is implemented on the Swarm simulation platform and models the order fulfillment process (OFP) as one of the core tasks of supply chain networks. In addition to modeling the interactions in the OFP, the MAIS is also used as a simulation testbed to experiment with different strategies to improve the performance of the OFP.     

Empirical decomposition of customer responses to discount coupons in online FMCG retailing

This study considers the efficacy of ‘general’ discount coupons: i.e. those whose discounts apply storewide. We decompose purchase behavior into three effects: spending, basket size, and inter-purchase time. The effects of dollar-off vs. percentage-off coupons are examined for 3,827 customers who had redeemed both types of coupon framings in an Australian online fast-moving consumer goods (FMCG) retail context. Results from Bayesian simultaneous equation modelling confirm that compared to dollar-off coupons, percentage-off general coupons induce customers to both spend more and shop more items. Moreover, by capturing consumer heterogeneity the customer base can be segmented into several clusters based on their reaction to coupons.     

Modeling and Promoting Organic Food Purchase

This study aims at enhancing organic food product (OFP) purchase by identifying customer segments based on their knowledge and attitude related to organic food along with their demographic profile. Two scales for measuring Knowledge and Attitude related to organic food were developed to measure their levels. The scales have covered six dimensions of organic food: Healthy, Eco-friendliness, Price, Availability, Certification, and Brand. After identifying the customer segments, each segment was further segmented based on their media consumption behavior. Hierarchical followed by K means cluster analysis resulted to six distinct segments with their corresponding subsegments. Cluster analysis was again performed for each customer segment, and a media selection method (MSM) was evolved to effectively communicate with OFP customers. These methods can guide marketers in devising an appropriate communication plan for enhancing OFP purchase.     

Does excessive buying for self relate to spending on pets?

Using two studies, this article explores how a tendency to buy excessively for self relates to spending on one's pet. Existing research on excessive buying reports that these buyers spend money primarily on themselves. Excessive buying is the tendency to be preoccupied with buying and, consequently, to buy relatively more and more often than others. The first study, using a qualitative research approach, provides insights into the relationship of excessive buying for self and for pets. This study reveals that excessive buyers consider their pets as full family members and extensions of themselves. The second study, a national survey conducted via the Internet, provides a quantitative test of the relationship between excessive buying for self and spending on pets. Respondents who score high on an excessive buying index also tend to spend more on their pets for toys, food treats, clothing, accessories, and grooming products.     

Household expenditure on poultry and seafood in the U.S.A. - a cross-sectional analysis

This study investigates the determinants of household expenditures on poultry and seafood using the 1992 Consumer Expenditure Survey. Higher income and larger households with a better-educated and older household head spend more on poultry, especially during the fourth quarter of the year, than others. Higher income and north-eastern households with a non-white and better-educated household head spend more on seafood than others. Poultry expenditures are more sensitive to changes in household size than to changes in household income. In contrast, seafood expenditures are more sensitive to changes in household income than to changes in household size.     

Families' use of the 1982 tax cut income

The likely allocation of extra income from the 1982 U.S. income lax rate reduction by a group of consumers was investigated. Eighty-five percent of the sample indicated they were likely to spend the additional income and 75% that they would save or invest it. Saving was related to income and age. Those indicating they were likely to save said they would require a larger sum of money as a result of the tax cut in order to make a decision about its use than did those who were most likely to spend it.     

Picking Gifts for Picky People

Shoppers report that 39% of their holiday gift-purchases are for someone “picky.” However, despite the ubiquity of shopping for picky people, little research has examined how people choose gifts for picky people. In the present research, we define the “picky gift recipient” as someone perceived to have narrow and unpredictable preferences, and we show how shopping for someone picky alters gift giving behavior. We find that although gift giving norms prescribe that gift givers spend effort, time, and money on gifts to strengthen their social ties, an exception to this rule occurs when a gift recipient is picky. When shopping for someone picky, givers believe that increasing their resources on a gift will not result in greater recipient-satisfaction with the gift itself—a lay belief that ultimately demotivates givers, causing them to spend fewer resources on picky people (even picky friends). That said, we find that consumers are more willing to spend money on superficial gift-features for picky people, such as professional wrapping, to “dress up” their gifts. Based on this preference, we developed and tested a novel promotion strategy that retailers could implement to recoup some of the lost spending by consumers who are shopping for picky people. In all, this research contributes to the literature on gift giving dynamics, and provides insights more broadly into how shoppers negotiate the burden of shopping for someone whom they anticipate will not like their choice.     

Multichannel marketing: Mindset and program development

Individual consumers have quickly embraced the practice of using a variety of channels through which to make their purchases, as 65-70% of them are multichannel shoppers. Indeed, multichannel shoppers (defined as those who utilize a variety of different purchasing channels, including bricks-and-mortar stores, the telephone, and the Internet) are now in the majority, and spend significantly more than single-channel shoppers. Given this reality, it is critical that organizations adopt a multichannel mindset and effectively employ a multichannel marketing program, as these can enhance profitability, the customer experience, and customer satisfaction. It is the aim of this article to provide firms with guidance in developing an effective multichannel mindset and in designing a multichannel marketing program for serving end-consumers in business to consumer (B2C) situations.     

Chewing increases consumers' thought-engagement during retail shopping

In five studies, we conclude that chewing gum may be an effective way to increase consumers’ thought-engagement while shopping. First, consumers chewing gum spend more time and report more thoughts than those who were not chewing gum, demonstrating the “chewing effect”. We also find that chewable candies have similar effects as chewing gum. Second, chewing more increases the viewing time and variety-seeking behavior among consumers. However, chewing too much gum decreases individuals’ focus, eliminating the “chewing effect”. Finally, the chewing effect is mitigated when consumers are under high cognitive load. These results are tested in laboratory settings and in a field setting (grocery store). Overall, this exploratory research demonstrates the applicability of using chewing gum (or chewable candies) as an effective way to enhance consumers’ thought-engagement in a retail context.     

The impact of the introduction and use of an informational website on offline customer buying behavior

Do customers increase or decrease their spending in response to the introduction of an informational website? To answer this question, this study considers the effects of the introduction and use of an informational website by a large national retailer on offline customer buying behavior. More specifically, we study a website's effects on the number of shopping trips and the amount spent per category per shopping trip. The model is calibrated through the estimation of a Poisson model (shopping trips) and a type-II tobit model (the amount spent per category per shopping trip), with effect parameters that vary across customers. For the focal retailer, an informational website creates more bad than good news; most website visitors engage in fewer shopping trips and spend less in all product categories. The authors also compare the characteristics of shoppers who exhibit negative website effects with those few shoppers who show positive effects and thus derive key implications for research and practice.     

The Public Health Implications of Consumers' Environmental Concern and Their Willingness to Pay for an Eco‐Friendly Product

Environmental concern has been an important topic for more than 40 years and has recently become even more critical with today's concerns about creating a sustainable and healthy environment. This research examines factors affecting an individual's willingness to pay more for an environmentally friendly product. Our results show that willingness to pay more differs across demographic groups. We also find that individuals who rate concern for waste as highly important are willing to spend more money on an eco‐friendly product. Consequently, our findings provide insight into the development of appropriate educational strategies for different consumer groups to encourage consumers to purchase eco‐friendly products, with a goal of creating a healthier environment for current and future generations.     

Presence of children and household food expenditures at home and away from home

Households with children spend more on food at home than do households without children. On the other hand, compared with households without children, households with children who are at least 12 years of age are associated with higher expenditures on food away from home expenditures. Households with employed spouses are associated with lower expenditures on food at home. Other determinants of expenditures on food at home are seasonality, house ownership, region, household size, education, age and income. House ownership, region, household size, race, education and income also affect expenditures on food away from home.     

The Distribution of U.S. Income and Food Expenditures

Food expenditure and income distributions over 1980–1985 are examined using two welfare criteria: less inequality and more available resources. Intertemporal changes in the distributions are studied from the perspectives of inequality, relative economic affluence, society's satisfaction with the distributions, asymmetries, and average propensities to spend. Major conclusions are that inequality has increased over time in both the income and food spending distributions, relative economic affluence has generally risen, society is less satisfied with the food spending distribution, and average propensities to spend on food have been constant.     

Part-time entrepreneurship and financial constraints: evidence from the Panel Study of Entrepreneurial Dynamics

To date, entrepreneurship literature overlooks part-time entrepreneurs, i.e., those who devote time to entrepreneurial ventures and wage employment at the same time. In contrast, recent evidence from the Global Entrepreneurship Monitor, a large cross-national study on the level of entrepreneurial activity, establishes that 80% of nascent entrepreneurs also hold regular wage jobs. This paper offers a model of entrepreneurial entry under financial constraints where individuals choose between wage employment, part-time, and full-time entrepreneurship. Those who become nascent entrepreneurs must further decide how much capital to invest and what proportion of time to spend in business. I test this model using data from the Panel Study of Entrepreneurial Dynamics, which covers start-ups and nascent entrepreneurs. My findings show that part-time entrepreneurs are not affected by financial constraints. The analysis suggests that industry barriers, risk aversion, and learning by doing might be other factors worth investigating.