Extending Product Life: Technology Isn't the Only Issue

Margaret DeBell, (student), University of Maryland
Rachel Dardis, University of Maryland
ABSTRACT - In recent years there has been increased interest in improving the reliability, durability and efficiency of major household appliances. However, information concerning consumer response to such improvements is limited. The purpose of this study was to investigate factors influencing consumer purchase and disposal decisions for major appliances. Two different categories of appliances - washing machines and refrigerators -were selected to examine the impact of fashion/technological obsolescence and performance obsolescence on the disposal decision. The results indicated that factors influencing the purchase or disposal decision varied by product category, and that such variations should be considered in making product durability decisions.
[ to cite ]:
Margaret DeBell and Rachel Dardis (1979) ,"Extending Product Life: Technology Isn't the Only Issue", in NA - Advances in Consumer Research Volume 06, eds. William L. Wilkie, Ann Abor, MI : Association for Consumer Research, Pages: 381-385.

Advances in Consumer Research Volume 6, 1979      Pages 381-385

EXTENDING PRODUCT LIFE: TECHNOLOGY ISN'T THE ONLY ISSUE

Margaret DeBell (student), University of Maryland

Rachel Dardis, University of Maryland

[The authors wish to express their appreciation of the help offered by Dr. Theodore Wang and the personnel at the Center for Consumer Product Technology at the National Bureau of Standards. We are also grateful to the Computer Science Center at the University of Maryland, for the use of their facilities.]

ABSTRACT -

In recent years there has been increased interest in improving the reliability, durability and efficiency of major household appliances. However, information concerning consumer response to such improvements is limited. The purpose of this study was to investigate factors influencing consumer purchase and disposal decisions for major appliances. Two different categories of appliances - washing machines and refrigerators -were selected to examine the impact of fashion/technological obsolescence and performance obsolescence on the disposal decision. The results indicated that factors influencing the purchase or disposal decision varied by product category, and that such variations should be considered in making product durability decisions.

INTRODUCTION

In recent decades a great deal of attention has been directed toward conservation of our natural resources at every level, including household appliance consumption. Figures show that in 1972 an estimated 330 million major appliances were in use in the U.S. A 1973 study by the Center for Policy Alternatives at M.I.T. concluded that both the recovery of resources from appliance discards and the extension of product life had potential value, and recommended further study of both these areas (M.I.T., 1976).

The need for further research is highlighted by the fact that appliances are durable products characterized by high manufacturing costs, high consumer costs both initially and throughout the product life, and long life expectancy. Technological improvements which would increase the life expectancy and energy efficiency of appliances should result in the following benefits: a) a decrease in the demand for scarce resources; b) a decrease in the rate of solid waste disposal; c) a decrease in costs to consumers when initial cost is averaged over the years of product use; and d) a saving to the total economy through the retention of the "value added" during manufacture for products which would otherwise be reduced to scrap or landfill (Lund, 1975). Technologically we know it is possible to manufacture products of increased durability. But whether we can extend product life is another matter. We have witnessed over the past two decades a relatively static discard age. For example, a comparison of service-life expectancies for major household appliances in 1957 and 1975 by Ruffin and Tippett (1975) found the expectancies relatively unchanged. In light of obvious technological advances in this period, such a finding appears surprising. In addition, it appears that technological changes over the past two decades may also have improved product reliability, or the rate of service incidence (M.I.T., 1976). Other factors must therefore be counteracting the impact of technological change on potential product durability.

According to Robert Lund of M.I.T., there are several reasons for the unchanged life expectancies of appliances (Lund, 1975). They include: a) high service costs; b) unavailability of replacement parts; c) a mobile population resulting in a high number of second owners of appliances, and; d) consumer affluence permitting consumers to discard prior to product failure. Technological change resulting in premature product obsolescence or changes in family composition are major reasons for product discard by affluent consumers.

The above discussion is illustrated in Figure 1. The marginal costs and marginal benefits from owning an appliance are measured on the vertical axis, while time is measured on the horizontal axis. When the consumer first purchases the product, the marginal benefits from owning it are high while the marginal costs i.e. operation, maintenance, and repair, are low. Over time the marginal costs are expected to increase, while the marginal benefits decline due to technological or fashion obsolescence. Thus the introduction of automatic defrost refrigerators rendered earlier models obsolete even though performance failure had not occurred. An example of fashion obsolescence is the remodeling of a kitchen and the consequent replacement of working refrigerators due to aesthetic considerations. While the curves are hypothetical and will vary for different appliances and for different consumers, the disposal decision will be made when the marginal costs from ownership exceed the marginal benefits. In terms of the previous discussion, therefore, technological improvements, by extending product life, should shift the marginal cost curve to the right. However, rising repair costs and unavailability of replacement parts due to technological change will shift the marginal cost curve to the left. In addition, technological change will shift the marginal benefit curve to the left by rendering existing products obsolete. As a result, the expected life of appliances may remain relatively static in spite of major changes in product technology.

FIGURE 1

FACTORS INFLUENCING PRODUCT RETENTION OR DISPOSAL

The objectives of this study were to investigate factors influencing consumer purchase and disposal decisions for major appliances. It was hypothesized that major appliances might be separated into two distinct categories: a) those appliances where mechanical or performance obsolescence was likely to dominate the disposal decision and b) those appliances where fashion or technological obsolescence was likely to dominate the disposal decision. Washing machines, clothes dryers and hot water heaters are likely to fall into the first category, while appliances such as refrigerators, stoves and dishwashers are likely to fall into the second category. Due to their widespread use in American households, washing machines were selected to represent the first category. Both appliances also entail considerable life-cycle operating costs due to energy consumption, so that respondents' awareness or interest in energy efficiency could also be investigated.

METHOD

Sample Section

An important consideration in selecting the sample was to contact persons who had made a purchase or disposal decision within the past two months. This time period was designed to ensure that respondent's answers were based on a recent experience and were hence less likely to result in inaccurate responses due to recall problems.

The target population included both purchasers and disposers of appliances. According to Ruffin and Tippett (1975) approximately 5 - 10% of households are likely to discard a given appliance during a specified year. Thus, a large sample would be required to yield respondents who had made a disposal decision within the past two months. It was concluded that retail stores would be an efficient source of respondents, since the high saturation rate for both refrigerators (99%) and washing machines (72%) meant that a large percentage of appliance purchases were also replacement purchases.

The sample of purchasers was obtained with the help of retailers in the Metropolitan Washington D.C. area. Three types of retailers were selected a) a major discounter, b) a major department store, and c) a specialty appliance store. Each retailer provided us with a list of recent purchasers of washing machines or refrigerators and all persons on this list were contacted.

A telephone survey was used to contact the respondents. However, in order to ensure a favorable response, a letter of introduction explaining the purpose of the survey preceded the telephone call. All surveys were conducted by a single interviewer, thus minimizing interviewer bias. A total of 219 persons were contacted and 179 interviews were completed resulting in an 82% response rate.

Questionnaire

The questionnaire consisted of three sections: socioeconomic characteristics of respondents, purchase decision process and disposal decision process. The purchase decision section included a) factors influencing brand and store choice, b) search activity by respondents, and c) major product features considered by respondents including durability and energy efficiency. The disposal decision section focused on a) product age at time of disposal, b) reasons for product disposal, c) condition at disposal and d) method of disposal.

In most instances questions were open ended in order to permit maximum flexibility of response. It was also felt that respondents would have little difficulty in answering such questions in view of the relatively short period between the purchase/replacement decision and the interview.

Analysis

Chi-Square analysis and rank correlation analysis were used to investigate significant differences between variables. A 0.05 level of significance was used in all instances.

RESULTS

Eighty-nine percent of the refrigerator purchasers and 64% of the washing machine purchasers were making replacement purchases. All respondents were questioned concerning product purchase decisions, while replacement purchasers were questioned concerning product disposal decisions as well.

Socio-Economic Characteristics of Respondents

The socioeconomic characteristics of respondents are given in Table 1. As the data indicate, the sample was composed of persons in the older age bracket, and both education and income levels were above average. The fact that the sample is not representative of the U.S. population should be borne in mind in evaluating the results of the survey. It should be emphasized, however, that this was a pilot study which was intended to explore the feasibility of a particular data collection method, and to provide a basis for further research concerning consumer purchase/disposal decisions for major appliances.

There was no significant difference between purchasers of washing machines and purchasers of refrigerators. Thus variations in purchase or disposal decisions could be examined with respect to product category, irrespective of socio-economic characteristics of purchasers.

Purchase Decision

There was a significant difference between appliances with respect to reasons for brand choice (Table 2). In the case of refrigerators, features were cited by 57% of the respondents followed by price (44%), brand reputation (31%) and size (26%). In contrast, reliable-in-past ranked first for washing machines (39%) followed by features (38%), brand reputation (31%) and recommendations of consumer magazines (29%). The relative importance of performance/maintenance considerations for washing machines was also shown in the number of respondents citing recommendations of friends or servicemen or service/warranty considerations as reasons for brand choice. Thus while both groups of purchasers were influenced by features, brand reputation and price, service and reliability considerations appeared more important for washing machine purchasers, while features more important for refrigerator purchasers.

Price, brand availability, and convenience were cited as major reasons for store patronage in the case of both appliances. Again, however, service considerations were important for washing machines. Thus product service was cited by 21% of washer purchasers compared to 13% of refrigerator purchasers. In addition 8% of washer purchasers selected the store because it had serviced their old appliance.

A search index was developed based upon procedures discussed by Newman and Staelin (1972) and Katona and Mueller (1955). The search activity index depended on a) number of brands considered, b) number of stores shopped, c) number of information sources, and d) time spent on shopping activity (Table 3). Refrigerators were characterized by higher levels of search activity, probably reflecting the importance of product features and price to consumers.

Features important in appliance selection are given in Table 4. Features common to both washing machines and refrigerators are listed first. Both durability and size are important. However, durability is the major factor for washing machines compared with size for refrigerators. Approximately one third of the respondents cited specific features such as water levels and automatic defrost as important in appliance selection. Energy efficiency was relatively unimportant for both appliances, ranking seventh for refrigerators and eighth for washing machines.

TABLE 1

SOCIO-ECONOMIC CHARACTERISTICS OF RESPONDENTS

TABLE 2

REASONS FOR BRAND CHOICE

TABLE 3

SEARCH ACTIVITY

TABLE 4

FEATURES IMPORTANT IN APPLIANCE SELECTION

The results are in agreement with previous research by M.I.T. (1976) and the National Bureau of Standards (Stiefel, Kim, Hung, 1976). A 1975 M.I.T. study found the American consumer more interested in features, size, appearance, function and price than in energy consumption. The NBS research report which was issued in 1976 stated that consumers appeared to be relatively indifferent to the operating costs of products relative to the initial purchase price. This "myopic" condition was explained as the result of lack of exposure to quantitative information regarding operating and repair costs, as well as the education to make use of such information

An energy interest index was developed based on the number of respondents who had considered energy conservation features in the decision process (Table 5). While the majority of the respondents claimed that they had considered energy conservation features, less than one third had considered more than one energy feature. It should also be remembered that respondents were likely to respond positively to queries concerning awareness and interest in energy conservation. Thus the fact that 27% of washing machine purchasers and 42% of refrigerator purchasers had considered no energy feature is significant. The results for refrigerators are particularly important since the M.I.T. study indicated that operating costs (i.e. energy consumption costs) account for more than 50% of the life cycle cost of refrigerators.

TABLE 5

INTEREST IN ENERGY CONSERVATION FEATURES

Disposal Decisions

Disposal has been defined differently by different researchers. At what point is a product discarded? Some will contend that as soon as an owner relinquishes possession of an appliance, it has been discarded. There are problems with this definition, for in some areas the refrigerator and stove must be left with the house, if sold. We, therefore, defined disposal as the action taken by the owner when he decides to replace an appliance, regardless of the motive. For example, if the household's primary refrigerator is replaced by a new refrigerator, the old refrigerator is considered as "disposed" even though it may be retained in the basement. Likewise, if a family sells their home with a refrigerator included in the purchase price, the refrigerator is not considered disposed until the new owner makes a decision to replace it. The disposal decision is therefore a disposal/replacement decision.

As previously mentioned, the two appliances selected for the survey were designed to represent two different categories of household appliances: a) those appliances where performance obsolescence, e.g. mechanical failure was likely to dominate the disposal decision and b) those appliances where new features, size or new appearance was likely to dominate the disposal/replacement decision.

There should be, therefore, differences between washing machines and refrigerators in the condition of the product at the time of disposal and the reasons for disposal. The condition of the appliance at time of disposal is given in Table 6, and confirms this hypothesis. Only 9% of the washing machines were in good working order while 42% did not work at all. In contrast, 31% of the refrigerators were in good working order, while only 17% were inoperative.

TABLE 6

CONDITION OF APPLIANCE AT TIME OF DISPOSAL/REPLACEMENT

The results of Table 6 are reinforced by Table 7 which provides information concerning reasons for product disposal. As might be expected, the great majority of washing machines (93%) were replaced due to mechanical problems, while only 54% of refrigerators were replaced for the same reason. Features were unimportant for washing machines (6%) and accounted for 42% of the product disposal/replacement decisions in the case of refrigerators.

It was also hypothesized that method of appliance acquisition might influence the reasons for disposal, in particular for those appliances where features play a major role in the purchase decision. Thus, second owners of refrigerators, i.e. refrigerators purchased with a house, might be inclined to purchase a new product due to feature inadequancy rather than due to product failure. Since Americans are a mobile society (the 1970 census estimated that approximately 15 million households move each year) this could be expected to make an appreciable contribution to "early retirement" of appliances, and a supportive case for not increasing appliance durability. A Chi-square analysis showed a significant difference between original purchasers and second owners with respect to reasons for disposal of refrigerators. Thus 54% of the second owners disposed of the product due to inadequate features compared with 29% of original purchasers. In the case of washing machines, there was no significant difference between original purchasers and second owners with respect to reasons for disposal.

TABLE 7

MAJOR REASONS FOR PRODUCT DISPOSAL/REPLACEMENT

The above results are in agreement with a study commissioned by the Canadian government which found that mechanical failure of washing machines was one of the major reasons for product disposal (Stevenson and Kellogg, Ltd.). The same study also surmised that refrigerators and stoves, by virtue of being kitchen appliances, were more likely to be replaced by more modern and decorative units than other appliances, and that new features were of more substantial interest in the purchase of kitchen appliances than other appliances.

The average age of the disposed appliance was 12 years for washing machines and 14 years for refrigerators. These figures are not too dissimilar from those cited by the National Bureau of Standards and the Department of Energy which place the expected life of washing machines and refrigerators at 11 and 15 years respectively.

The disposition of the disposed appliance is given in Table 8. Approximately one-fourth of both appliances were discarded as trash. However, 26% of refrigerators were used elsewhere in the home compared with 4% of the washing machines. This undoubtedly reflects variations in operating conditions at the time of disposal, and the willingness of respondents to discard refrigerators before expiration of their useful life since such appliances continue to provide benefits to the homeowner. One wonders, however, if households have considered the additional cost of operating a second refrigerator. According to the Edison Electric Institute, a 17.5 cubic foot automatic defrost refrigerator consumes 2,250 kWh annually, which corresponds to an annual cost of $85.50 based on 3.84 per kWh.

The results of Table 8 also highlight the importance of determining the disposition of used appliances by dealers. Are used products discarded as trash or are they recycled thus increasing resource use? It is also interesting to note that there were no trade-ins for either appliance. The absence of a second-hand market for appliances makes the disposal decision of the household of prime importance in developing resource conservation policies.

TABLE 8

METHOD OF APPLIANCE DISPOSAL

DISCUSSION

According to Robert Lund (1975), the greatest benefit from increased product life is the reduction in consumer expenditures for new appliances. The next major benefit components are the reductions in municipal waste and the use of scarce resources. However, there are possible adverse effects. More durable products might require more expensive materials and might result in a decline in production and in employment. More durable products might also slow down the adoption of energy saving technological innovations. The reservations expressed by Robert Lund were also echoed by U.S. and Canadian manufacturers when they were questioned concerning the feasibility of increasing product durability (Stevenson and Kellogg, Ltd.). While there was agreement that product durability could be increased, the benefits were questioned for the following reasons: a) lack of consumer interest in increased product life, b) increased product cost, c) lack of correlation between potential lifetime and actual lifetime due to replacement of products, and d) use of more energy expensive materials thus defeating any gains in energy conservation.

The results of this consumer survey support many of the reservations of the manufacturers and Robert Lund. It appears that products are discarded by consumers due to technological or fashion obsolescence and increased product durability would have little impact on the age of appliances at discard. However, the results of this study also suggest that there are two different categories of appliances - those that consumers will retain until product failure occurs and those that consumers will discard prior to this condition. Thus product durability was mentioned by 66% of the washing machine purchasers compared to 38% of the refrigerator purchasers. Similarly, 93% of the washing machines were discarded due to mechanical problems, compared with-54% of the refrigerators. This suggests that improvements in product durability would have a greater pay-off for appliances such as washing machines which appear less subject to fashion or technological obsolescence.

While the study did not specifically investigate the availability and cost of repair, a significant number of appliances in both instances were discarded due to operating problems or because they no longer worked. As repair and maintenance costs increase, the benefits from improved product durability may be more than counteracted by the rising costs of maintaining the appliance in good working condition.

The results of this study indicate another area where resource conservation might be achieved - the area of energy conservation. We know that improved energy efficiency is technically feasible and that minimum energy efficiency standards for appliances will probably be formulated within the near future. However, minimum standards are only part of the solution to energy consumption. Consumer awareness of energy costs should result in a demand for more energy efficient appliances, thus increasing resource conservation. Consumers in this survey exhibited relatively little information concerning energy saving features, and energy efficiency ranked low for both appliances with respect to product selection. The proposed energy labeling program which is being implemented by the Federal Trade Commission should do much to correct this situation.

Finally, the particular data collection method used in this study appeared satisfactory. Major advantages included efficiency of data collection and recency of information obtained. While some limitations undoubtedly exist with respect to store participation, the advantages may more than outweigh the disadvantages.

REFERENCES

George Katona and Eva Mueller, "A Study of Purchase Decisions," in Lincoln H. Clark, ed., Consumer Behavior: The Dynamics of Consumer Reaction (New York: New York University Press, 1955), 30-87.

Robert T. Lund, "Making Products Live Longer," a paper for the Environment Directorate of the Organization of Economic Cooperation and Development (Paris: Reproduced by M.I.T., 1955).

M.I.T., "Consumer Appliances: The Real Cost," a report issued by the Center for Policy Alternatives, 1976.

Joseph W. Newman and Richard Staelin, "Prepurchase Information Seeking for New Cars and Major Household Appliances," Journal of Marketing Research, 9(August, 1972), 249-57.

Marilyn Doss Ruffin and Katherine S. Tippett, "Service-Life Expectancy of Household Appliances: New Estimates from the U.S.D.A.," Home Economics Research Journal, Vol. 3, No. 3(March 1975), 159-70.

Stevenson and Kellogg, Ltd., "Major Domestic Appliances and Automobile Tires: Environmental and Economic Impacts of Product Durability," a project report prepared for Waste Management Branch, Environment Canada and Office of Energy Conservation, Energy Mines and Resources, (March, 1977).

S. Wayne Stiefel, Justin Kim and Howard Hung, "Life Cycle Costing: An Assessment of Practicability for Consumer Products," a report prepared for the National Bureau of Standards, Center for Consumer Product Technology, Institute for Applied Technology, (December, 1976).

Theodore J. Wang, "Service Lives of Major Appliances," a paper presented at the American Council on Consumer Interests 23rd Annual Conference, April 1977, Denver, Colorado.

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