2006 AMS Annual Conference, May 24-27, San Antonio, Texas Factors Influencing Students’ Selection...
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Transcript of 2006 AMS Annual Conference, May 24-27, San Antonio, Texas Factors Influencing Students’ Selection...
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Factors Influencing Students’ Selection of Credit Cards: Some Initial Results
Charles Blankson
University of North Texas, Denton, Texas
Sylvia J. Long-Tolbert
University of Toledo, Toledo, Ohio
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Presentation
• Rationale for the study
• Research aim
• Methodology: 5 steps in scale development
• Results and Discussion
• Managerial contributions
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
American students
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Rationale for the study
• Importance of consumers’ selection/choice criteria in the changing competitive financial services (banking) sector (Lewis, 1982; Thwaites and Verre, 1995; Devlin, 2002).
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Rationale for the study contd.
• Difficulties in attracting and maintaining college students and the youth population (Lewis, 1982a).
• Bank advertising and promotions have little effect upon college students’ choice criteria (Lewis, 1982b).
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Rationale for the study contd.
• Some 82% of US college students own at least one credit card (Roberts and Jones, 2001).
• The subject of the criteria/factors used by college students in selecting credits card brands is important in the banking services sector.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Rationale for the study contd.
• “…it is of little use for an organization to attempt to position and differentiate an offering by emphasizing particular attribute(s) that do not constitute significant choice/selection criteria in the target market…” (Devlin, 2002, pp.276).
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Research Aim
• To develop a scale that measures college students’ decision criteria (selection) when evaluating and/or choosing a credit card brand.
• Note: This study does not deal with the debate about (a) students’ credit card debt and (b) credit card companies’ ethical behavior on college campuses.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Research Objectives
• To generate a pool of items or statements which college students employ in their evaluation and/or selection of credit card brands and
• To synthesize and then reduce these statements/items into key determining factors explaining or underpinning college students’ selection of credit card brands.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Methodology: Initial generation of statements (step 1)
• Pre-notification announcements in class rooms.
• Focus group sessions:– Involving a convenience sample of 70 undergraduate and
graduate business students (4 batches of 15 undergrads and one batch of 10 evening MBA students at GVSU)
– vocabulary about the descriptions of their evaluation criteria and rationale for their selection of their credit card brands.
• Qualitative analysis was conducted via the inductive reasoning approach (Brady and Cronin, 2001):– 80 statements/items were identified.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Deletion of duplicate statements (step 2)
• Examination of the 80 statements was via the inductive reasoning – resulted in the retention of 43 statements/items.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Initial collection of perceptions (step 3)
• The 43 items formed the questionnaire and was pre-tested among a convenience sample of 40 undergrad and 14 MBA students from GVSU (Parasuraman, Zeithaml, Berry, 1988).
• Finally, a self-administered survey was carried out in class rooms using a convenience sample of 600 students from GVSU, Cornerstone university and Drexel university.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Initial collection of perceptions (step 3 contd.)
• The 43 statements (questionnaire) were measured on a 7 – point Likert scale (1 = not important at all and 7 = very important).
• Out of the 600 questionnaires distributed in class rooms, a total of 338 were received, yielding a 56% response rate.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Scale development (step 4)
• The underlying structure of the data was explored via EFA (DeVellis, 1991; Churchill, 1997; Fabrigar et al., 1999).
• Considerable degree of inter-factor correlation.
• The Bartlett test of Sphericity (Approx. Chi-square = 18063.571; df = 1275; sig. 0.000) and
• KMO measure of Sampling Adequacy Index (0.917) confirmed the appropriateness of the data for EFA.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Scale development (step 4 contd.)
• Principal component analysis was employed to reduce the number of factors using the 50% cut-off criteria.
• 9 factors were extracted and accounted for 61% of the variance.
• Examination of the communality column further showed evidence of the overall significance of the solution extracted.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Scale development (step 4 contd.)
• The oblique (Oblimin) rotation was applied to the data.
• The factor loading for the common factors was subjected to the 0.5 absolute value (Hair et al., 1998).
• Internal reliability was assessed via the Cronbach Alpha ά.
• All factors exceeded the adopted criteria.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Identification of the main factors (step 5)
• Following:– Examination of the EFA results,– Analysis of the internal reliability,– Conceptual coherency of the indicated
factors….
Four factors emerged and were named (Parasuraman, Zeithaml, Berry, 1988; Spector, 1992).
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Internal consistency of revised structure
• Factor 1 (Buying power)– Good when traveling
– For shopping
– To order from catalogs
– Easier than writing checks
– Gives extra buying power
ά Value = 0.8467
• Factor 2 (Incentives)– Cash back bonuses
– Cash back at the end of th year
– Gain points for using card
– Pays you to use it
– Receive discounts on purchases
ά Value = 0.8570
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Internal consistency of revised structure
contd.
• Factor 3 (Firm’s Reputation)– Friendly staff
– Competence
– Good customer service
– Good service provision
– Reputation of the organization
– Quick service Consistency
ά Value = 0.8603
• Factor 4 (Enhance good credit)– To establish good credit
– To obtain credit
– ά Value = 0.7574
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Results and Discussion
• This study has attempted the development of a scale measuring factors influencing students’ selection of credit cards.
• Buying power = confidence in purchases that the usage of the card and/or affiliation with the card organization brings to the consumer.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Discussion contd.
• Incentives = issues about enticement and “perks” used by organizations to woo or attract customers to obtain and use a card.
• Firms’ reputation = a card organization’s reputation regarding good service provision, consistency, competence and friendly staff.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Discussion contd.
• Enhance good credit = the benefits of establishing credit history from the usage of the card.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Managerial contributions
• The results could be useful for managers and advertising executives involved with students’/youth credit card accounts.
• Employ the four factors to reflect marketing strategies or tactics (e.g., services marketing mix, relationship marketing):– To change consumers’ attitudes about a card brand,– To change the card brand’s image and – Pursue these strategies in proactive manner to pre-
empt the competition.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Managerial contributions contd.
• While “financial security” and “enhance good credit” may be pursued by all card organizations,
• we infer that “incentives” and “firm’s reputation” are crucial factors/strategies capable of differentiating and/or positioning a card brand.
2006 AMS Annual Conference, May 24-27, San Antonio, Texas
Thank you