Innovativeness and Mobile Phone Replacement: an Empirical Study in Taiwan

ABSTRACT - This study discusses the relation between innovativeness and the replacement of mobile phones, which are a durable product. The proposal idea was that consumer innovators would frequently replace durable products that were still functioning well. Such innovators might purchase new products when the original ones became out of date. That is, such consumers regard these durable products as fashion products. This study conducted a questionnaire survey in Taiwan to verify this proposition. Mobile phones are selected as the target durable product for empirical survey, and domain specific innovativeness scales (DSI) are used to measure consumers’ innovativeness for mobile phones. Several statistical techniques were used, including Pearson correlation analysis, cluster analysis, t-test, ANOVA, and the Structure Equation Model (SEM), and the analytical results demonstrated a positive correlation between consumers’ innovativeness and intention to replace mobile phone. The results of this study showed that durable products might actually be fashion products for innovators. Such consumers may purchase durable products frequently, and form an important market segment that firms should pay increased attention to.

Citation:

Chih-Chien Wang, Li-Chuan Wang, and Yann-Jy Yang (2005) ,"Innovativeness and Mobile Phone Replacement: an Empirical Study in Taiwan", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 280-283.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Pages 280-283

INNOVATIVENESS AND MOBILE PHONE REPLACEMENT: AN EMPIRICAL STUDY IN TAIWAN

Chih-Chien Wang, National Taipei University, Taiwan

Li-Chuan Wang, ICAT Technology, Taiwan

Yann-Jy Yang, National Chengchi University, Taiwan

ABSTRACT -

This study discusses the relation between innovativeness and the replacement of mobile phones, which are a durable product. The proposal idea was that consumer innovators would frequently replace durable products that were still functioning well. Such innovators might purchase new products when the original ones became out of date. That is, such consumers regard these durable products as fashion products. This study conducted a questionnaire survey in Taiwan to verify this proposition. Mobile phones are selected as the target durable product for empirical survey, and domain specific innovativeness scales (DSI) are used to measure consumers’ innovativeness for mobile phones. Several statistical techniques were used, including Pearson correlation analysis, cluster analysis, t-test, ANOVA, and the Structure Equation Model (SEM), and the analytical results demonstrated a positive correlation between consumers’ innovativeness and intention to replace mobile phone. The results of this study showed that durable products might actually be fashion products for innovators. Such consumers may purchase durable products frequently, and form an important market segment that firms should pay increased attention to.

INTRODUCTION

The mobile phone industry seems to have entered a mature stage in many countries, including Taiwan. The number of new mobile phone users, those using mobile phones for the first time, is only increasing slowly. Thus most manufacturers are trying to marketing new models to consumers who already have mobile phones. The market segment involving consumers who are buying new model mobile phones to replace old but still functioning phones is called as the "replacement" market, and becomes crucial once mobile phones are already widespread.

People buy mobile phones for various reasons. The first reason for buying a mobile phone is to uses telecommunication services. This reason only applies for those who are not mobile phone users now. Most of them are the first time users. This reason for purchasing new mobile phones is less important than before because of the popularization of mobile telecommunication service.

Another reason for buying a new mobile phone is the loss or breakage of a previously owned one. In this situation, users must buy a new mobile phone if they wish to continue using mobile telecommunication services since they do not own a working mobile phone. However, few people have not yet adopted mobile telecommunication services. Moreover, mobile phones normally are not easily damaged and tend to have quite a long lifetime. Most mobile phone manufactures provide warranties of one year or longer. Such long warranties demonstrate that mobile phones do not break easily, and moreover can be considered a durable product.

The main and fundamental functions, including making and receiving voice calls accurately and clearly, are similar within most new and old mobile phone model. Additionally, mobile phones are relatively expensive. Therefore, mobile phones can be considered a durable product, making it difficult for marketers to attract customers to replace their old mobile phones.

Nevertheless, some people regard mobile phones as fashion products, meaning that some mobile phone purchases are made simply to replace an existing model with a new one.

For those who consider mobile phones to be fashion products, a "cool" mobile phone is extremely important for their daily life. Out of date models of mobile phone are unacceptable to this type of customers. These customers constantly seek new model mobile phones, and view purchasing a new mobile phone as a routine shopping activity. They see mobile phones as similar to clothes or watches. For them, there is nothing strange about owning more than one clothes or watches. Why not owe more than one mobile phones? A key issue facing mobile phone marketers thus is find buyers who consider that mobile phones are a fashion product.

Consumer innovators are the earliest buyers of new products. The role of consumer innovators in diffusion is important because they provide revenue and feedback to firms launching new products. Consumer innovators influence the spread of new products to later buyers via word of mouth, and their rejection of a new product may spell its demise (Foxall, 1984; Gatignon and Robertson, 1991; Kotler, 1994; ch.14). Marketers of consumer merchandises are well aware that one key to the successful introduction of new products is to focus on selling these products to the consumer innovators (Midgley, 1977). Sales to these early buyers represent a positive cash flow development, and early buyers may be heavy users in some product fields (Goldsmith, d’Hauteville, Fllynn, 1998). Successful sales to consumer innovators may achieve market leadership and establish effective barriers to entry that prevent other firms from easily entering the market. Consumer innovators thus represent a key market segment that many marketers are anxious to identify, profile and influence. The chief problem facing marketers thus is how to identify and locate these important consumers.

INNOVATIVENESS AND ITS MEASUREMENT

Roger and Shoemaker (1971) state that innovativeness was "the degree to which an individual is relatively earlier in adopting an innovation than other members of his social systems" and measured innovativeness based on time-of-adoption. This approach is controversial owing to its potential measurement error in determining when an innovation was introduced. Another conceptualization of innovativeness was developed by Midgley and Dowling (1978) who expressed the notion that innovativeness was "the degree to which an individual is receptive to new ideas and makes innovation decisions independently of the communicated experience of others". Midgley and Dowling established a cross-sectional method for measuring innovativeness based on "determining how many of a pre-specified list of new products a particular individual has purchased at the time of survey". This method is also controversial. One criticism is that this method for measuring innate innovativeness as a global personality trait is of limited use in studying innovativeness in a specific domain.

Kirton (1976) designed another approach for measuring innovativeness using 32 five-point scales on which the respondents indicate their behavioral consistency to the specified innovative behaviors over time. The major criticism of the method developed by Kirton (1976) is that large number of items makes it difficult to implement.

Goldsmith and Hofacker(1991) developed the domain specific innovativeness scale, or DSI, to provide a valid and reliable short self-report scale that survey and market researchers can use to measure consumer innovativeness for specific product categories. DSI has been repeatedly validated for both goods and services. Notably, various studies have demonstrated DSI to be both reliable and valid (Flynn and Goldsmith, 1993a,1993b; Goldsmith,1996; Goldsmith and Flynn, 1992,1995; Link, 1995; Goldsmith and Hofacker, 1991).

Comparison with the measurement approaches proposed by Roger and Shoemaker (1971), Midgley and Dowling (1978), Kirton (1976), and Goldsmith and Hofacker (1991) revealed that the last one was suitable for this study in that the focus is on a specify product, mobile phone. This study adopts DSI proposed by Goldsmith and Hofacker (1991) for mobile phone innovativeness and tests the correlation among innovativeness, frequency of purchasing new mobile phones, and intention to purchase mobile phones with new functions. The newest technology being applied in mobile phones at the time of this study was Multimedia messaging Service (MMS). Accordingly, this study measured purchase intention of new model mobile phone with MMS function.

QUESTIONNAIRE DESIGN AND DATA COLLECTION

This study conducted a mail questionnaire survey. One-thousand three-hundred and forty members of three Taiwanese professional societies were chosen as subjects, and returned 170 completed questionnaires (response rate, 12.7%). Of the 170 returned responses, 135 were usable responses while 35 were discarded owing to missing date, namely 79.4% were usable questionnaires. The participants comprised 126 males and 39 females, with an average age of 39.32 years old (Standard Deviation, SD,=11.23). The fact that the sampling was not random is not problematic, since this study did not aim to generalize its results to a specific population of interest (Ferber, 1997).

Fashion innovativeness was measured using a five item scale modified from the Domain Specific Innovativeness Scale (DSI) developed by Goldsmith and Hofacker (1991). The questionnaire was written in Chinese. After the DSI were translated into Chinese, item five of DSI, "Generally, I am the last in my circle of friends to know the names of the latest mobile phones," was deleted because the meaning after translation into Chinese was little different from item six, "I know more about new mobile phones before other people do," In pre-testing, questionnaire subjects reported too similar between these two items in Chinese.

Additionally, one item scale, "Even if my mobile phone is not damaged or lost, I still frequently replace it with a new one," was used to measure the frequency of fashion motivated mobile phone purchases. Another two items were used to measure intention to buy new mobile phones with MMS functions, namely: "Supposing my mobile phone was damaged and I needed to buy a new one, I would buy a new mobile phone with MMS function," and "If I had to buy a new mobile phone, I would choose one with MMS function."

All these items were measured in seven-point Likert-type scales where 7 represented strongly agree and 1 represented strongly disagree.

DATA ANALYSIS

Summed innovativeness scores ranged from 5 to 35, with mean 14.88 (SD=5.83). Coefficient alpha was 0.812, demonstrating good reliability for such a short scale.

To assess the dimensionality of the innovativeness scale, this study performed principal component analysis and found that only one factor was extracted from the five item innovativeness scale if the rule "eigen values should exceed one" was applied. This resembles those in numerous previous studies demonstrating this DSI to be unidimensional (Flynn and Goldsmith, 1993a; 1993b; Goldsmith and Flynn, 1992; 1995;Goerlich, 1996; Link, 1995; Litvin, 1996).

To understand the relation between innovativeness and purchase intention for new mobile phones, several statistical techniques were conducted, including Pearson correlation analysis, cluster analysis, t-test, ANOVA, and Structure Equation Model (SEM). The results of Person correlation analysis showed that the innovativeness was positively related with mobile phone replacement frequency (r=0.55, p<0.05) and the purchase intention for purchase new mobile phone with MMS function (r=0.35, p<0.05).

Additionally, the subjects were divided into two clusters by K-mean cluster analysis based on the DSI score. Seventy subjects (51.9%) scored between 15 and 35, with an average of 19.29 (SD=4.22), and this group was designated "innovators". Moreover, 65 subjects (48.1%) scored between 5 and 14, with an average of 10.14 (SD=2.84), and this group was designated "followers." The t-tests indicated a significant difference in average DSI scores (p<0.05) between these two clusters. The average score of mobile phone purchase frequency for innovators was 2.51 (SD=1.47), while for followers the average score was 1.45 (SD=0.75). A significant difference (p<0.05) thus existed between these two clusters. Additionally, significant difference also existed between the intentions of innovators and followers in purchasing mobile phones with MMS function (p<0.05). The intention for innovators averaged 9.15 (SD=3.14) while that for followers averaged 6.88 (SD=3.42). These results demonstrate that the innovators have higher intention of purchasing new mobile phones, and replace mobile phones more frequently compared to followers.

The number of clusters was preset in K-mean cluster analysis. This study conducted additional cluster analysis to explore the possible results if three rather than two clusters were selected. Subjects were divided into three clusters using K-mean cluster analysis according to DSI score. Notably, 33 subjects (24.4%) scored between 19 and 35, with an average of 22.42 (SD=4.20), and were designated "early innovators"; 60 subjects (44.4%) scored between 12 and 18, with an average of 15.21 (SD=1.92) and were designated the "majority", and 42 subjects (31.1%) scored between 5 and 11 with an average of 8.47 (SD=2.07) and were classified as "late followers." ANOVA showed a significant difference in average DSI scores (p<0.05) among these three clusters. The average score of mobile phone purchasing frequency for early innovators was 2.91 (SD=1.63), compared to 1.98 (SD=1.16) for the majority, and 1.31 (SD=0.56) for followers, indicating a significant difference (P<0.05) among the various groups. Besides, significant differences also existed among the intentions of early innovators, the majority, and late followers in purchasing mobile phones with MMS function (p<0.05). The average intention of early innovators was 9.58 (SD=3.18), compared to 8.17 (SD=3.44) for the majority, and 6.71 (SD=3.25) for the late followers, indicating a significant difference (P<0.05) among the various groups. The above ANOVA results demonstrate that early innovators have higher intention to purchase new mobile phones and also replace their mobile phones more frequent than the majority and late follower groups.

SEM was also used to analyze the relationship among innovativeness, frequency of replacing mobile phone and intention to purchase a new mobile phone with MMS function. Several indicators were used to assess the adequacy of the SEM model. Values exceeding 0.9 for these indicators suggest a good fit, while values exceeding 0.8 indicate marginal acceptance. The model used here, displayed in Fig. 1, has a Goodness of Fit Index (GFI) of 0.920 and a Normed Fit Index (NFI) of 0.934, indicating a good fit. The Adjusted Goodness of Fit Index (AGFI) is 0.848, exceeding 0.80 and approaching 0.90, and thus is marginally acceptable. Moreover, the Non-Normed Fix Index (NNFI) and Comparative Fix Index (CFI) are 0.942 and 0.961, respectively. Both of these two indices exceed the value of 0.9, which was taken to indicate a good fit. The c2 value is 44.389 (p<0.01) and the ratio of c2 to degree of freedom is 2.336, exceeding 2.0 and less than 5.0. The c2 and c2/df ratio also showed good model fitness. Overall, these fit indices exceed acceptable or marginally acceptable levels and demonstrate that the proposed SEM analysis has good fitness.

Figure 1 illustrates the results of SEM analysis. The parameters illustrated in Fig. 1 are 0.744 (p<0.05) and 0.644 (p<0.05), indicating the latent independent variable, innovativeness, is significantly and positively correlated with the dependent variables, frequency of mobile phone replacement and intention to purchase a mobile phone with MMS function.

FIGURE 1

RELATIONSHIP BETWEEN INNOVATIVENESS AND MOBILE PHONE PURCHASE

DISCUSSION

As Hirschman (1980) indicated, "the propensities of consumers to adopt novel products, whether they are ideas, goods, or service, can play an important role" in consumers marketing activities. Innovators contribute significant revenue to sellers when launching new products. Moreover, innovators also influence the spread of new products to later buyers. One key to successful new product introduction is selling to consumer innovators] (Midgley, 1977), and these early buyers may be heavy users in some product fields (Goldsmith et al., 1998).

Identifying consumer innovators thus is a key problem for marketers. The Domain Specific Innovativeness scale is one solution to this problem. DSI has been used to measure consumer innovativeness for specific product categories. Previous studies have focused on food (Goldsmith, 2001), clothes (Goldsmith et al., 1999; Goldsmith and Newell,1997; Fynn and Goldsmith, 1992), wine (Goldsmith et al., 1998), travel services (Fynn and Goldsmith, 1993a) [and so on OR etc.], but not mobile phones. Most previous studies focused on non-durable products or service. This study used DSI to consumers’ innovativeness to mobile phones, a durable product. The results of this study indicated that the concept of innovativeness and the DSI scale could be applied for durable products as well as for non-durable product and services.

From the results of the empirical survey, this study found that innovativeness was positively related to mobile phone replacement frequency and intention to purchase a new mobile phone with new function. Innovativeness thus also exists for durable products. Notably, innovative consumers may buy durable products more frequently than other consumers. For durable product innovators, it is not unusual to purchase new models of durable products to replace old ones even the old ones are still functioning well. Consumer innovators purchase mobile phones more frequently than others, and also are faster to adopt new models of mobile phones. Consumer innovators thus represent an important market segment, particularly when the mobile phone market is maturing market and growth is slowing.

As noted previously, mobile phones are a durable product and do not break easily. Once most consumer already own mobile phones, growth in this market tends to slow markedly. However, the mobile phone manufacturing industry is still very healthy. One explanation for this phenomenon is that many consumers treat mobile phones as fashion products and thus replace them frequently, just as for clothing or other consumer products. In this respect mobile phones appear similar to watches. For some consumers, owing more than one watch is not strange thing. Such consumers buy new watch even when their old watches are not broken.

To summarize, mobile phone consumer innovators see mobile phones as fashion accessories and thus replace them frequently. Besides, the concept of innovativeness is adequate for durable goods as well as for fashion goods. This support the idea proposed by Hirschman (1980) that innovativeness is crucial in consumer marketing activities. This importance applies for both durable and non-durable products.

REFERENCE

Ferber, R (1997), "Research by convenience", Journal of Consumer Research, Vol.4 No.1, pp.57-8.

Foxall, G. (1984), Corporate Innovation: Marketing and Strategy, St. Martin’s Press, New York, NY.

Fynn, L.R. and Goldsmith, R.E. (1993a), "Identifying innovators in consumer service markets", Service Industries Journal, Vol. 13 No. 3, pp. 97-109.

Fynn, L.R. and Goldsmith, R.E. (1993b), "A validation of the Goldsmith and Hofacker innovativeness scale", Educational and Psychological Measurement, Vol. 53 No. 4, pp. 1005-116.

Gatignon, H. and Robertson, T.S. (1991), "Innovative decision processes", in Robertson, T.S. and Kassarjian, H.H. (Eds), Handbook of Consumer Behavior, Prentice-Hall, Englewood Cliffs, NJ, pp.316-48.

Goerlich, B. (1996), "A new approach to measuring innovation". Presentation to the Market Research Council, 18 March.

Goldsmith, R.E. (1996), "Service innovativeness and price sensitivity: an exploratory study", in Morre D.L. (Ed.), Association of Marketing Theory and Practice Proceedings, Vol. 5, pp.85-91.

Goldsmith, R.E., d’Hauteville, F. and Flynn, L.R. (1998), "Theory and measurement of consumer innovativeness: a transnational evaluation", European Journal of Marketing, Vol. 32 No.3/4, pp.340-53.

Goldsmith, R.E. and Flynn, L.R. (1992), "Identifying innovators in consumer product markets", European Journal of Marketing, Vol. 26 No.12, pp. 42-55.

Goldsmith, R.E. and Flynn, L.R. (1995), "The domain specific innovativeness scale: theoretical and practical dimensions", in Moore, D.L. (Ed.), Association of Marketing Theory and Practice Proceedings, Vol. 4, pp. 177-82.

Goldsmith, R.E. and Hofacker, C.F. (1991), "Measuring consumer innovativeness", Journal of the Academy of Marketing Science, Vol. 19 No. 3, pp.209-21.

Hirschman, E. C. (1980). "Innovativeness, Novelty seeking and Consumer Creativity", Journal of Consumer Research, 7, pp. 283-295.

Kotler, P. (1994), Marketing Management: Analysis, Planning, Implementation, and Control, 8^th ed., Prentice-Hall, Englewood Cliffs, NJ.

Kirton, M. . (1976). "Adaptors and Innovators: A Description and Measure", Journal of Applied Psychology, 61. pp.622-629.

Link, F. (1995), "An integrated theory of the willingness to pay for adoption of innovations", licentiate thesis, Institute of Economics Research, Lund University.

Litvin, S. (1996), "Ecotourism: a study of purchase proclivity", Journal of Vacation Marketing, Vol.3 No. 1, pp. 43-54.

Midgley, D.F., (1977), "Innovation and New Product Marketing", New York: John Wiley.

Midgley, D.F. and Dowling, G.R. (1978), "Innovativeness: The Concept and Its Measurement," Journal of Consumer Research, 4, 229-42.

Rogers, E.M. and Shoemaker, F. F. (1971), Communication of Innovations, New York: The Free Press.

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