Consumer Innovativeness for Fashion as a Second Order Construct: A Cross-Cultural Study

Abstract

Setting and changing prices is difficult for marketingmanagers, especially for new products. Consumer pricesensitivity (how consumers react to prices or to price changes)makes a difference in the likelihood consumers will buy(Ainslie and Rossi 1998). For many new products, thereactions of the earliest buyers or innovative consumers arecritical to success (e.g., Munnukka 2005). But how importantis the price of new products to innovators? The answer to thisquestion is of theoretical interest and of practical importance tomarketers, especially when marketing new fashions, whereinnovators play a crucial role in consumer acceptance. Existing research shows that innovators are relatively lesssensitive to prices of new products than are later adopters; thatis, they are more willing to pay higher prices (Goldsmith1996, 1999). However, the evidence in favor of the negativerelationship between innovativeness and price sensitivity isbased largely on studies that conceptualize and measureinnovativeness as a unidimensional construct (e.g., Goldsmithand Newell 1997). Although this approach is valid, it can becriticized because the concept of consumer innovativeness ismultidimensional (see Muzinich, Pecotich, and Putrevu 2003). We propose that consumer innovativeness can beconceptualized as a higher-order construct consisting of fourdimensions: involvement, information search, subjectiveknowledge, and opinion leadership. The purpose of the presentstudy is to reevaluate the negative innovativeness/pricesensitivity relationship using a causal model analysis in whichinnovativeness is represented by a multi-dimensional,second-order factor. To enhance this relationship’sgeneralizability, we perform the analysis on datasets fromsamples of consumers from Korea and the U.S., offering across-national comparison. Price sensitivity refers to individual differences in howconsumers react to prices and price changes and is influenced by economic circumstances, demographics, situational factors,personality, amount of product use, and product involvement(Munnukka 2005). Price sensitivity varies across productcategories as well as reflecting an overall marketplacedisposition. Studies show that when consumer innovativeness ismeasured directly, a negative relationship exists between pricesensitivity and innovativeness; consumers who want and buythe newest products are willing to pay more for them thanless interested consumers (Goldsmith 1996, 1999; Goldsmithand Newell 1997). U.S. and Korean adults and college students completed thesurvey. The U.S. data came from a convenience sample ofadult consumers. The sample consisted of 164 men and 151women, with eight missing values for sex. The respondentsages ranged from 19 to 80, with a mean of 34.4 years(SD=12.5) and a median age of 29.5 years. In Korea the 857respondents were aged 20 to 73 years, with a median of 27years and included 398 men and 462 women. Studentscompleted surveys in the classroom. Adults were surveyed viaintercept interviews conducted in selected locations around thecity of Pusan, S. Korea. The questionnaires containedmulti-item scales used to measure fashion involvement, fashioninformation search, subjective fashion knowledge, fashionopinion leadership, and fashion price sensitivity. To test the hypothesis, we estimated the proposedsecond-order model with all measurement items from thesecond-order partial variance invariance CFA using EQS forWindows 6.1. The results revealed an excellent fit of themodel with the empirical covariances with χ2= 1371.79 on426 df, NNFI=.940, CFI=.944, CAIC= -2063.07, andRMSEA=.044 (Hu and Bentler 1999). Relying on the excellentfit of the structural model, we tested the hypothesis of anegative effect of innovativeness on price sensitivity. Theempirical results support the hypothesized negative effect(p<.01) with a standardized path coefficient of -.546 in Koreaand -.569 in the U.S. Although the two coefficients aresignificantly different at .05, comparing these two coefficientsis inadequate as the second order measurement model onlysupported partial variance invariance (Steenkamp andBaumgartner 1998). These results provide evidence for our novelconceptualization of consumer innovativeness and show that thenegative innovativeness/price sensitivity relationship observed inU.S. consumers can be generalized to Korean consumers aswell. Managerially, we see that managers can price new fashionsat higher levels when they seek to sell them to fashion innovators than when they sell to later adopters. Basically,having the newest thing is worth the extra cost. Moreover, thefindings extend the scope of the innovativeness/price sensitivityrelationship to a new culture in which it has not yet beenstudied. This is evidence for the robustness of the theory ofconsumer innovativeness. The study supports the argument that consumerinnovativeness can be conceptualized as a multi-dimensionalconstruct. This may enable researchers to incorporate manyvariables into their models of consumer behavior that theycould not do so previously because they lacked valid, reliablemeasures of these constructs. Methodologically orientedresearchers should also examine possible negative aspects ofthis approach as well so that it is not accepted unquestionablyby the research community. In conclusion, we feel that the study achieves its goal ofintroducing a new view of fashion innovativeness and a newway to operationalize it cross-culturally. By conceptualizingfashion innovativeness as a second order concept, this studyoffers a more comprehensive approach to its measure. Furthermore, the dual study context, Korean and U.S. consumers, suggests a possibility that fashion innovativenessresults in price insensitivity cross culturally.