The Effect of Consumer Literacy on Product Choice

EXTENDED ABSTRACT - Forty-four million people in the United States cannot read a newspaper or fill out a job application and another fifty million more cannot read or comprehend above the eighth grade level (Kirsch et al, 1993). Illiteracy is rampant in many emerging markets. For instance, the adult illiteracy rate in India and China is 44% and 17% respectively. Even wealthier nations with high purchasing power, such as in Saudi Arabia and United Arab Emirates, suffer 25% illiteracy rates (World Bank, 2001). Yet, consumer research assumes implicitly that consumers possess sufficient levels of literacy to comprehend available information. With the increase in literacy, research on the topic within marketing has declined to an almost non-existent level (Wallendorf, 2001). Thus, marketing researchers have apparently drawn their cue from the increasing rate of literacy rather than the continued large size of the low-literacy market segment. Even more alarming, literacy also appears to be assumed by marketing practitioners who do little to aid decision-making by low-literacy consumers. In the absence of aid from retailers and/or consumer product manufacturers, consumers with low literacy often engage in decision-making with poor results such as buying substandard products or paying price premiums (Wallendorf, 2001). Such outcomes suggest that low-literacy consumers systematically differ from high-literacy consumers in decision-making processes.

Citation:

Haeran Jae and Devon DelVecchio (2005) ,"The Effect of Consumer Literacy on Product Choice", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 77.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Page 77

THE EFFECT OF CONSUMER LITERACY ON PRODUCT CHOICE

Haeran Jae, University of Kentucky, U.S.A.

Devon DelVecchio, University of Kentucky, U.S.A.

EXTENDED ABSTRACT -

Forty-four million people in the United States cannot read a newspaper or fill out a job application and another fifty million more cannot read or comprehend above the eighth grade level (Kirsch et al, 1993). Illiteracy is rampant in many emerging markets. For instance, the adult illiteracy rate in India and China is 44% and 17% respectively. Even wealthier nations with high purchasing power, such as in Saudi Arabia and United Arab Emirates, suffer 25% illiteracy rates (World Bank, 2001). Yet, consumer research assumes implicitly that consumers possess sufficient levels of literacy to comprehend available information. With the increase in literacy, research on the topic within marketing has declined to an almost non-existent level (Wallendorf, 2001). Thus, marketing researchers have apparently drawn their cue from the increasing rate of literacy rather than the continued large size of the low-literacy market segment. Even more alarming, literacy also appears to be assumed by marketing practitioners who do little to aid decision-making by low-literacy consumers. In the absence of aid from retailers and/or consumer product manufacturers, consumers with low literacy often engage in decision-making with poor results such as buying substandard products or paying price premiums (Wallendorf, 2001). Such outcomes suggest that low-literacy consumers systematically differ from high-literacy consumers in decision-making processes.

Therefore, the dual goals of this paper are to a) apply existing theory to explain the choice process of low-literacy consumers and b) demonstrate how the presence of a decision aid at the point-of-purchase can improve choice by allowing low-literacy consumers to better use information. We explore the influence of literacy on consumers’ decision- making behavior in a choice environment by conducting a simple experiment in which the underlying cognitive process that drives product choice is compared across low- and high-literacy consumers. More specifically we employ the Elaboration Likelihood Moel (Petty and Cacioppo, 1981, 1984) to predict the outcome of a shopping task and demonstrate that providing a visual decision aid can reduce differences in decision-making between low- and high-literacy consumers.

Eighty subjects comprise of the sample for the experiment. Forty-one subjects with low literacy were recruited from local reading center. For the purpose of our study, low-literacy adults are those who possess literacy skills of Level 1 or Level 2 (see Adkins, 2001 for the same interpretation). All of the low-literacy subjects have been tested at a Level 1 or Level 2 literacy level by the reading center. Thirty-nine high-literacy subjects were recruited from the staff members of a large southeastern university. As series of four logit log-linear analyses was used to analyze the differences in the rate of choice of the peripheral cue brand by low- and high-literacy consumer groups across the two choice conditions (written decision aid/ visual decision aid).

The findings of the current study support the main premise that, given adequate involvement, high-literacy consumers tend to choose a product based on central cues while low-literacy consumers tend to choose a product based on peripheral cues. The findings also indicate that presenting a visual aid improves the ability of low-literacy consumers to make normative decisions. From a policy standpoint, the findings speak to the need for simple visual product descriptions to enable low literacy consumers to make more informed decisions.

----------------------------------------