Advances in technology have resulted in short-lived competitive
advantage based on product features or design. Product innovation and
quality are no longer sufficient as a basis of competitive advantage
(Butz and Goodstein, 1996). Buyers of durable goods, such as
automobiles, tractors, combines, computers, electric power generators
and large household appliances that require product support services
during their use are increasingly viewing brands in the same product
category as about the same in attributes, price and quality. When it is
not easy for buyers to differentiate among competing brands of durable
goods the product support services buyers value may become the basis of
brand choice. Valued services for many major consumer durables include
delivery, financing, installation, operator training, maintenance and
repair, replacement parts, and warranty (Farris, Wittmann and Hasty,
2005). Any of these product support services can be a competitive
advantage for a physical goods supplier (Gronroos, 2000; Barney, 2002;
Markeset and Kumar, 2005). Even producers of commodity chemicals,
products that are made to the same industry standard, have used support
services to differentiate their brand from those of their competitors
(Robinson, Clarke-Hill and Clarkson, 2002).
It has been suggested that consumers of various categories of
durable goods in less developed economies value certain product support
services more than others and consider the availability of those valued
services in choosing a brand (Ekeledo and Firoz, 2007). However, no
empirical investigation has examined product support priorities of
consumers of a major durable product in a developed country versus those
of consumers of the same product in a developing country. This
investigation is important because it provides managers with an insight
into consumer motivation for choosing particular brands of durable goods
over others. Better understanding of product support needs of consumers
in a market enables managers to design a product support program that
provides superior customer value to customers in a target market (Lele
and Karmarkar, 1983). A support program that does not reflect the
services a target market buyers value will be ineffective and a waste of
valuable company resources. This paper is concerned with how the level
of economic development in a target market may affect the importance
buyers place on specific product support services for major consumer
durables. The study compares product support service preferences of
consumers in a developed country with those of consumers in a developing
country. Research hypotheses are presented and tested with a set of data
from each of the two economic environments. The aim is to ascertain the
importance buyers in each of the two market environments attach to
specific product support services. The next section presents a brief
discussion of the theory underlying the use of support service as a
product differentiation tool and competitive advantage.
2. THEORETICAL BACKGROUND
The theoretical underpinning of this study is the market-led view
of competitive strategy. The market-led view of competitive advantage
focuses on customer value. According to this view, the study and
analysis of competitive advantage should focus on the competitiveness of
a firm's offerings in the marketplace (Mathur, 1988; Bowmann and
Faulkner, 1997; Devlin, 2001). Customer value is a source of competitive
advantage, and an effective competitive strategy is one that delivers
superior value to consumers (Porter, 1985). Therefore, the key question
that a firm must answer when developing a product support service
program is which services it offers are valued by buyers. Customer value
is reflected in a buyer's preference and evaluation of the
attributes of the brand, performance of those attributes, and results of
using the brand relative to the customer's goals and purposes in
making the purchase (Woodruff, 1997; Parasuraman, 1997). The market-led
view suggests that consumers' favorable evaluation of product
support for the brand results in brand preference. Therefore, it is
necessary for a company that supplies a brand of major consumer durable
to ascertain the importance its target customers attach to each support
service that comes with its brand. The importance consumers attach to
each service offering should influence which support service(s) to
As noted earlier, products could be augmented with service
differentiator, making support service an integral part of the product.
Because support service adds value to the core product, it can be a
major source of competitive advantage for the brand. But to achieve the
status of a competitive advantage, the service has to be valuable to
customers, and lead to brand preference (Barney, 2002).
3. PRODUCT SUPPORT EXPECTATIONS AND RESEARCH HYPOTHESES
Product support includes everything that can help enhance the
benefits and satisfaction the consumer receives from the product. Major
consumer durable goods, such as automobiles, motorcycles, personal
computers, printers, and home appliances may need routine maintenance,
or require repair and replacement parts when they break down. Therefore,
buyers have expectations of appropriate level of product support for
each category of durable goods (Kotler, 2003).
A buyer's product support expectation is likely to reflect the
condition of the product when it was purchased (new versus previously
owned item) and the level of economic development in the country where
the product will be used. Thus a prospective buyer of a consumer durable
is likely to be influenced in her or his choice of a brand by the valued
support services that accompany the product. For example, a person
looking to buy a pre-owned passenger car is likely to be interested in
service contract, access to repair and replacement parts service, and
warranty. In developing countries where many major durable goods are
previously owned imported goods (Economist, 2004), buyers are likely to
be concerned with only a few product support services. Buyers in
developed economies are likely to be influenced in their choice of a
brand by a higher number of product support services because of a higher
level of competition among suppliers.
[H.sub.1]: Compared with buyers in Nigeria (a developing country),
buyers in the United States (a developed country) use more support
services in judging among competing brands of passenger cars and
3.1 Product Support Services
As noted before, service differentiators for manufactured goods
include: financing, ordering ease, delivery, repair and replacement
parts, and warranty. Hypotheses are developed for each of the
afore-listed product support services. Sellers of passenger cars and
personal computers often offer these services. Because of low factor
loading as explained later, customer training, installation and
consulting were dropped. Those services appear not to be relevant to
passenger cars or personal computers.
To help a customer purchase a major consumer durable, the seller
may offer financial support in the form of a loan. Many retailers in the
United States offer financial assistance through in-house credit card
that allows a customer to charge the purchase and pay it off over time.
Alternatively the customer could use her or his credit card (Visa,
Master Card, American Express, or some other credit card) to pay for the
merchandise. For the purchase of a passenger car, the seller may also
direct a buyer to a financial institution to secure a loan to enable the
buyer purchase the car. For example, a car dealership may have a
representative of a financial institution within its premises where the
car buyer can secure financing for the purchase.
Financing methods and systems are advanced and well established in
developed countries. As a result, financing has become an integral part
of business transactions in most developed economies. The risk of
nonpayment is much lower in advanced economies. Defaulting on a loan
carries serious consequences for the buyer because it results in low
credit rating, which may make future loans difficult to obtain. This
situation is not common in many developing countries for reasons that
include lack of a good social security numbers system that help keep
track of people and ensure that a person does not disappear into the
crowd after receiving financing for a purchase. Furthermore, securing a
loan in many developing countries is more difficult for ordinary people;
loans in those countries often require a guarantor and acceptable
guarantors to lenders are not easy to find. So business transactions in
developing economies tend to be on the basis of cash and carry. In
addition, lenders may not want to finance a purchase that involves a
used item because second-hand items suffer very rapid depreciation in
[H.sub.2]: Compared with buyers in the United States, buyers in
Nigeria do not consider financing very important in judging among
competing brands of passenger cars and personal computers.
3.3 Ordering Ease
Ordering ease refers to the amount of effort required to order the
product from the supplier. In the United States, major consumer
durables, such as automobiles and personal computers, can be ordered
online. Thus, ordering ease may be the reason a particular customer buys
a Dell computer instead of another brand that is not easy to order
online for some reason.
But ordering ease may be affected by level of economic development
in the country where the market is located. For example, the Internet
and good telephone infrastructure enhance ordering ease, but Internet
readiness and telephone services differ between developed countries and
developing countries (Siegel, 2004). Many developing countries, such as
Nigeria, lack the infrastructure needed to order products online and
deliver them to the customer. Because buyers are accustomed to waiting
for their order in less developed countries, ordering ease is not likely
to be an important issue for buyers. Besides, markets for imported goods
in many less developed countries tend to be sellers' markets
because of the paucity of suppliers (Sternquist, 2007). So sellers in
this type of market environment tend to offer fewer product support
services, especially those services that do not generate additional
revenue like repairs and replacement parts.
[H.sub.3]: Compared with buyers in Nigeria, buyers in the United
States attach greater importance to ordering ease in their brand choice
of passenger cars and personal computers.
Delivery refers to transferring the purchased product to the
buyer's custody with speed, accuracy, and care (Kotler and Keller,
2006). Delivery service may also include helping the customer get rid of
the old product being replaced, such as when the delivery people pick up
the old item being replaced or a car dealership takes the buyer's
old car as a trade-in. Cemex of Mexico, an international cement company,
uses speed of delivery as a competitive edge in the cement business; the
company promises to deliver concrete promptly or give a discount of
twenty percent if the delivery is more than ten minutes late (Slywotzky
and Morrison, 2000).
Delivery is likely to be an important support service in selecting
a brand in developed countries than in developing countries. In
developing countries, there is likely to be many people on the
seller's waiting list of buyers because of fewer local producers
and dependence on imported second-hand products. Second-hand goods,
which are often imported from developed countries, may not be available
in large numbers to make delivery an important issue: customers are
happy and willing to invest the time and energy to pick up their order
from the supplier.
[H.sub.4]: Compared with buyers in the United States, buyers in
Nigeria attach less importance to delivery service in selecting a brand
of passenger cars and personal computers.
A warranty is a formal statement by the manufacturer of a product
expressing confidence in expected product performance within the
warranty period. In the warranty, the manufacturer may promise repair,
replacement, or refund if the product does not meet buyer's
performance expectations while the item is under warranty. Thus a
manufacturer uses a warranty to express confidence in the quality and
reliability of its product. Warranties take many forms, but our interest
here is basic types of warranties such as those that come with a new
product and extended warranty. For many durable goods, such as
automobiles, major home appliances, and electronic products,
manufacturers in developed countries, or a third party service provider,
offer extended warranties covering repair and parts replacement needs
that may occur after the expiration of the initial manufacturer warranty
period. Extended warranty may be worthwhile for a brand that is not well
established (Grant, 2007).
Warranties are standard service offerings for most new durable
goods sold in developed countries in that products are legally required
to meet buyer's normal or reasonable expectations in the early
stages of the product's life. So, extended warranty is likely to
have greater influence on brand preference in developed countries
because of high cost of labor. Also, one would expect extended warranty
to be popular in developing countries because of the average age of
products in use in those countries. However, cost of labor is much lower
in most developing countries. Cost of replacement part is a greater
worry for buyers in most developing countries; hence repair service
contract, the common form of extended warranty, may not have much impact
on brand preference.
[H.sub.5]: Compared with buyers in Nigeria, buyers in the United
States place greater importance on extended warranty service in
selecting a brand of passenger cars and personal computers.
3.6 Repair and Replacement Parts
Repair service focuses on restoring the product to working
condition when it fails, while replacement parts often accompany
maintenance or repair. Consumers worry about product reliability
(reflected in failure frequency and good performance), dependability
(reflected in adequate repair and parts services), and cost of repair
(Lele, 1997). A buyer is likely to consider these concerns when choosing
a brand of major durable goods to purchase.
In developing countries, where most buyers of major durables depend
on imports, many of which are used goods (Economics 2004), buyers are
likely to worry about availability of repair and replacement parts
services for a brand being considered for purchase. Also usage condition
may influence the importance of repair and replacement parts as leading
product support worries in developing countries. For example, the
abundance of unpaved and poorly maintained roads in many developing
countries often result in greater number of repairs of passenger cars
than is the case in developed countries where most roads are paved and
better maintained. The age of the item when purchased increases the
importance of repair and replacement parts in selecting among brands.
Because many consumer durables in developing countries are imported
pre-used products, as noted earlier, access to adequate repair and parts
services for a brand is likely to be a top concern of buyers. Thus the
most valued product support in a developing country will be repair and
[H.sub.6]: Compared with buyers in the United States, buyers in
Nigeria attach greater importance to repair and replacement parts
services in selecting a brand of passenger cars and personal computers.
3.7 Brand Preference
As noted before, product support service is an important brand
differentiator especially in an industry where producers have achieved
parity in the core product (Sheth and Mittal 2004). Brands that offer
more valued product support are likely to do very well in the
marketplace. The presence of a large number of service providers for a
brand is an indication that most buyers prefer that brand (Ekeledo and
Firoz, 2007). Thus popular brands create more support service providers
for the brand, which in turn attract more buyers to the brand.
Furthermore, product support service providers are an important source
of advice to potential buyers of durable goods regarding brand choice.
Popular brands have a band wagon effect on new buyers. Imitation of
other consumers creates a bandwagon effect that strengthens brand
preference and enhances the brand's performance in the marketplace
(Hunter, 2002). In developing economies, brand preference for passenger
cars and personal computers should be associated with valued product
[H.sub.7]: For passenger cars and personal computers, there is a
positive relationship between product support services consumers value
and brand preference.
To verify the hypotheses developed in the section before, passenger
cars and personal computers were used to collect data in two countries,
the United States for a developed economy and Nigeria for a developing
economy. Passenger cars and personal computers were selected for this
exploratory study because they appear to be available in large numbers
in the two countries to allow some meaningful comparison between buyers
in the two market environments. Because of difficulty in obtaining a
useable sample frame in most developing countries, research studies
involving consumer behavior in less developed countries often rely on a
convenience sample (Cateora and Graham, 2005). To keep research
methodology the same for both countries, a convenience sample of owners
of passenger cars and personal computers was also used to collect data
in the United States.
The survey data were collected using self-administered face-to-face
survey. The questionnaire was handed to owners of passenger cars and
owners of personal computers to complete while the research assistant
waited to collect the completed questionnaire and answer questions the
respondent might have about completing the questionnaire. This data
collection exercise is similar to the method used by airlines to
administer questionnaires during a flight; passengers are asked to rate
their satisfaction with various aspects of the airline's service on
the questionnaire. Malhotra (1988) and Kumar (2000) recommend this
method of data collection in developing countries because of the
difficult in obtaining a good sample frame for market research and
conducting telephone or mail surveys in those countries. Again, to keep
research methodology the same for the two countries, the same method of
data collection was used in the United State. The questionnaire was
administered to eighty respondents (forty owners of passenger cars and
forty owners of personal computers) in each country.
4.1 Measures and Their Validation:
The important predictor variables based on factor analysis, which
is discussed later, were delivery (deliver), financing (finance),
ordering ease (orders), repair and replacement parts (repair), and
warranty. These operational measures were based on established
measurement items or, where appropriate question items were not readily
available, were developed from theoretical information from previous
research that defines brand preference and product support services,
using guidance for developing measures for a construct when there is no
existing measures for the construct (see Churchill, 1979; Nunnally, 1978
and Nunnally and Bernstein, 1994). The criterion variable was brand
The first draft of the questionnaire was pilot tested on twenty
owners of the two products involved in the survey (ten from the U.S.A.
and ten from Nigeria). Feedback from the twenty respondents was used to
refine and improve the final draft of the questionnaire. Two predictor
variables, installation and operator training, were dropped because of
low factor loading and the belief that the variables may not have much
relevance to the two products involved in the study.
Confirmatory factor analysis, using the principle component
analysis with varimax rotation was conducted to assess the underlying
structural relationships among the constructs. As recommended, items
with a factor loading of 50 or higher were retained (Hair et al., 1998).
Cronbach (1951) reliability analysis was used to select the measurement
items used for testing the hypotheses. Measures with a coefficient alpha
of 70 or higher were retained for data analysis as recommended (Nunnaly,
1978). Table 1 is a summary of the result of the measure validation,
showing factor loading and coefficient alpha for the multiple-item
scales in the study.
Multiple regression analysis was conducted on each set of responses
to ascertain the product support services passenger car owners and
personal computer owners took into consideration in making their
purchase decision. Previous research on similar issues involving
developing countries employed multiple regression data analysis (for an
example, see Aulakh, Kotabe and Teegen, 2000; Ekeledo and Firoz, 2007).
Tables 2 and 3 summarize the regression results for respondents in the
United States and Nigeria respectively. As Table 2 shows, the linear
combination of the predictor variables for respondents in the United
States was significantly related to brand preference [F(5,74) = 116.18,
p < 0. 0001]. The sample multiple correlation coefficient was 0.89,
indicating that approximately 89 percent of the variance of brand
preference for the two products can be accounted for by the linear
combination of the predictor variables. Similarly, the linear
combination of the predictor variables for respondents in Nigeria was
significantly related to brand preference [F (5, 74), p < 0.0001].
The sample multiple correlation coefficients for respondents in Nigeria
was 0.82, suggesting that about 82 percent of the variance of brand
preference for the two products can be accounted for by the linear
combination of the predictor variables.
The regression results support [H.sub.1], [H.sub.4], [H.sub.5],
[H.sub.6] and [H.sub.7]. For [H.sub.1], Table 2 indicates that
respondents in the United States considered four product support
services (delivery, financing, repair and replacement parts, and
warranty) in judging among brands, while respondents in Nigeria used
only two services (financing and repair and replacement parts) in
judging among brands; thus supporting the prediction of H1 that
consumers of major consumer durables in the United States, standing for
a developed economy, are likely to use a greater number of product
support services in choosing among competing brands. Table 2 also
suggests that delivery, [H.sub.4], is a valued support service for
respondents in the United States (p < 0.05), while Table 3 suggests
that delivery is not important to respondents in Nigeria (p > 0.10),
just as [H.sub.4] posits. Consistent with [H.sub.5], buyers of the two
products in the United States place a higher value on warranty (p <
0.05) than buyers in Nigeria (p > 0.10). Hypothesis six ([H.sub.6])
posits that buyers of major consumer durables in Nigeria, standing for a
developing country, will attach greater importance to repair and
replacement parts services. Table 3 regression results indicate that
repair and replacement parts rank number one for respondents in Nigeria
(p < 0.0001). Although repair and parts (repair) also rank high for
respondents in the U.S., they rank second to financing for this group.
And hypothesis seven ([H.sub.7]) suggests a positive relationship
between product support services consumers value and brand preference
for passenger cars and personal computers. The regression models support
this hypothesis also. The results also indicate a strong positive
relationship between the predictor variables and the criterion variable,
brand preference (p < 00001 for each regression model) as expected.
Two hypotheses, [H.sub.2] and [H.sub.3], are not supported. Hypothesis
two ([H.sub.2]) posits that financing is not important to buyers in
Nigeria. Regression results indicate that buyers of passenger cars and
personal computers value financing just as their counterparts in the
United States do. While financing is the number one product support
service for respondents in the United States, it is one of the only two
significant product support needs for buyers in Nigeria. The implication
is that sellers in Nigeria who do not offer financing should consider
such a service for prospective buyers of the two products. Ordering
ease, H3, is not a significant product support need for buyers in either
the United States or Nigeria. Perhaps the reason for this result is that
buyers in the United States have many competing brands to choose from
and will not bother with a brand that is difficult to order. In the case
of Nigeria, there are fewer vendors to buy from, resulting in a
seller's market as noted before.
6. MANAGERIAL AND RESEARCH IMPLICATIONS
6.1 Managerial Implications
The results of this exploratory study suggest that passenger car
and personal computer buyers in both the United States and Nigeria
consider product support services in selecting a brand to buy. Buyers of
these products in the sample from the United States used more support
services in making their brand choice than their counterparts in the
sample from Nigeria did. To provide adequate and effective product
support in a market, managers must identify the services that buyers in
that market value most and the level of importance those buyers attach
to each of those services. Managers must also consider usage condition
in the market environment and the average age of the product in use when
developing support programs in each market.
Managers should be aware of the fact that product support services
have become a way to add value to physical products with a significant
support service component in their use. As such, many companies will
benefit from product support program that focuses on the important needs
of their customers. The study reported here suggests that there is a
positive relationship between product support services and buyer
preference for a brand. Hence, effective product support services can
result in a competitive edge for the brand.
With regard to level of economic development, buyers of passenger
cars and personal computers in the United States considered more support
services in their brand choice than buyers of the same products in
Nigeria, a developing economy. Thus managers' appraisal of product
support strategies should include recognition of the market's level
of economic development as a possible determinant of valued product
support services for buyers.
6.2 Research Limitations and Directions for Future Research
One limitation of this study is that the data in the study came
from two countries, a developed country and a developing country.
Therefore, the reported findings must be viewed with caution when
generalizing the findings to other developed or developing economies.
The United States is one country out of many developed countries to
which the study refers and Nigeria is also one country out of many
developing countries. Besides, developing countries are at different
levels of economic development; hence, Nigeria may not be representative
of some emerging markets in Asia and South America with a higher level
of economic development. A similar concern is that passenger cars and
personal computers do not represent all major consumer durable goods
that require support services in their use. For example, installation
and operator training dropped out of the initial list of predictor
variable perhaps because the two products involved in the study do not
lend themselves to those services.
Another limitation is that the results are based on convenience
samples, again limiting the generality of the findings. It is
inappropriate to generalize results from a no probability (convenience)
sample beyond the sample itself (Zikmund, 1997). However, convenience
samples continue to be used in many international marketing research
studies involving surveys of buyers because of the difficulty of
obtaining reliable probability sample, especially when the study
involves a developing country (Kumar, 2000). Nevertheless, this study
provides a useful foundation for a more comprehensive future study of
cross-national comparison of product support services.
Notwithstanding the contribution of the findings presented in this
report, future research focusing on product support services, which
should include more durable consumer goods and countries, is
recommended. Such a study will provide more understanding of the issues
examined in this study. Also, future research should be large enough to
isolate the products studied to ascertain product-specific factors that
need to be recognized in developing product support service programs in
various national markets.
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TABLE 1: RESULTS OF MEASURE VALIDATION
Item Factor Loading Coefficient
Brand Preference 0.73-0.83 0.96
Delivery 0.75-0.84 0.92
Financing 0.63-0.85 0.97
Ordering Ease 0.63-0.85 0.66
Repair and Replacement Parts 0.75-0.84 0.97
Warranty 0.68-0.70 0.94
TABLE 2: SUMMARY OF REGRESSION RESULTS FOR RESPONDENTS IN THE U.S.A.
Criterion Var. Brand preference
Predictor Var. Deliver Finance Orders
Beta Coef. 0.145 0.466 0.034
T Statistic 2.116 6.979 0.758
Sig. T 0.037 < 0.000 0.451
Cor. 0.81 0.87 0.47
Part Cor. 0.83 0.27 0.03
Adjusted [R.sup.2] 0.88
F Statistic 116.180
Sig. F < 0.0001
Predictor Var. Repair Warranty
Beta Coef. 0.242 0.190
T Statistic 4.098 2.408
Sig. T < 0.001 0.019
Cor. 0.76 0.86
Part Cor. 0.16 0.09
TABLE 3: SUMMARY OF REGRESSION RESULTS FOR RESPONDENTS IN NIGERIA
Criterion Var. Brand preference
Predictor Var. Deliver Finance Orders
Beta Coef. 0.125 0.194 0.026
T Statistic 1.518 3.207 0.404
Sig. T 0.133 < 0.002 0.687
Cor. 0.75 0.65 0.59
Part Cor. 0.07 0.35 0.02
Adjusted [R.sup.2] 0.82
F Statistic 74.718
Sig. F < 0.0001
Predictor Var. Repair Warranty
Beta Coef. 0.602 0.101
T Statistic 7.279 1.578
Sig. T < 0.0001 0.119
Cor. 0.88 0.65
Part Cor. 0.34 0.07