Consumer durables replacement decision-making: An overview and research agenda
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Consumer durables replacement decision-making: An overview and research agenda Joseph Guiltinan
Published online: 8 August 2009 # Springer Science + Business Media, LLC 2009
Abstract This paper reviews recent scholarship on the topic of consumer durables replacement behavior. Much of this research demonstrates the value of expanding a rational consumer decision-making perspective on replacement decisions to accommodate insights from consumer behavior. These insights are especially relevant for understanding voluntary replacement decisions that are not motivated strictly by economic trade-offs. Unfortunately, while broad in scope, this scholarship is limited in depth, and lacks a comprehensive model for portraying the relationships among the constructs that have been examined. This paper attempts to integrate the existing research base by offering a framework for conceptualizing the replacement decision process. Additionally, a suggested research agenda for validating and clarifying the hypothesized relationships in the framework is presented. Keywords Durable goods . Product replacement purchasing . Consumer discount rates
1 Introduction Modelers in economics and marketing generally presume that the consumer durables replacement decision process is founded on rational choice. As discussed below, emerging evidence from behavioral research suggests that the process is often based on psychological costs, frequently exhibits decision biases, and is conditioned by varying replacement situations and motives. However, because of the limited depth J. Guiltinan (*) Department of Marketing, Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556, USA e-mail: [email protected]
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Market Lett (2010) 21:163–174
of this research, the variety of constructs that have been applied, and the diversity of replacement buying contexts, we lack a comprehensive understanding of the decision process. This paper summarizes the theoretical and empirical literature on durables replacement decision making, and offers a framework and some priority research questions for future scholarship in this area.
2 Normative modeling contributions Modelers in economics and marketing have studied durables replacement behavior in contexts such as used goods markets (Bulow 1986), discretionary replacement (Bayus 1992), and cases where both the old and new products remain on the market (Padmanabhan and Bass 1993). Such work has also examined the effects of consumer expectations about replacement offerings (Nahm 2004) and about the magnitude of an upgrade (Zhao and Jagpal 2006). Typically, these modelers presume an underlying decision process in which consumers maximize the net utility of ownership over a time horizon when (per Fig. 1) they compare the incremental cost of the replacement and the relative utility of the old and new versions (Ellison and Fudenberg 2000). The utility of a replacement durable product is a function of the expected flow of the future benefits it will provide adjusted by the consumer discount rate, while t
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