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John Sum, Mario W.T. LiaoInstitute of E-Commerce, National Chung Hsing University, Taichung 40227, Taiwan
A SEM for the Purchase Intention of Video Game
Consoles
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 2
Outline Introduction
Objective of study Methodology
Background Survey Conceptual Model Analysis
Preliminary analysis Competitive models
Model Identification Findings Conclusions
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 3
Popular home video game consoles (VGC) Microsoft XBOX360 Sony PlayStation 3 Nintendo Wii
1. Introduction
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 4
Attributes Nintendo Wii Sony PS3 MS Xbox360
PriceNT 8,500 NT 12,000 (80G)
NT 6,980 (Arcade 遊樂版 )
Product Characteristics
Wii Remote, NunchukVirtual console
FC, SFC, N64Mega DriverNEOGEO
Wii Connect 24
Blue-ray DiskDual-shock 3Playstation Network
Platform
HD-DVD XBOX Live
Compatibility Complementary product
Wii Zapper, 電車GO!,
動物之森 , Wii 方向盤
Wii Fit
Compatible with PSUnable to be
compatible with PlayStation 2
Compatible with Xbox
Brand Value US 8,772* US 13, 583* US 59,007*
“*” Source: Interbrand.com.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 5
1. Introduction
Source: http://www.vgchartz.com/
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 6
1. Introduction
Interviews and Background Survey
Model Conceptualization
Data Collection
ScaleReliability and Validity
Model IdentificationModel Validation
Model Interpretation
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Model Conceptualization Literature survey for factors
influencing purchasing intention
Professional games players opinions
Preliminary Analysis In prior to Step 3 Small sample size Pilot study on the research
model Model Validation
In Step 5 Competitive analysis with
other possible models Based on GFI and related
indices
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 8
2. Survey Price
Limited budget on purchase intention (Gray M. Erickson and Johansson 1985) even in intrinsic attribute information (Mitra 1995).
Acceptable range when consumers purchase products (Dodds, 1991) Product characteristics
A measure for purchase intention (Lyman E. Ostlund 1974; Susan L. Holak 1988; Rosemary R. Seva, Henry Been-Lirn Duh et al. 2007)
Specialized product characteristics can be more attractive and influences purchase intention (Dhar and Sherman 1996)
Compatibility Associated with how the product fit with consumers’ behavior patterns,
life-styles and values (Rogers 1983). A measurable indictor on purchase intention for durable and non-
durable technology products (Peter C.R. 1979, Labay and Kinnear 1981).
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 9
2. Survey Word-of-mouth communication
Communicate the product (and services) information among consumers (Robert East, Kathy Hammond et al. 2007)
Purchase intention is governed by WOM recommendation sources is (Patricia A. Goering 1985).
NWOM will generate negative messages about product through interpersonal channels (Herr, Kardes et al. 1991, Maheswaran and Meyers-Levy 1990)
Brand Brand is a substantial effect on purchase decision making when product
quality is uncertainty (Chu;, Choi; et al. 2005). The brand is a collection of name, term, and symbol representing
producer and is determined as being distinguishable from other corporations (Kolter 1999).
Brand image is associated with brand. It has been recognized as an important concept in marketing (Gardner and Levy; 1955).
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 10
3. Research Model
Price
ProductCharacteristics
Comaptiblity
Brand
Word-of-mouthcommunication
PurchaseIntention
H4a
H5a
H7a
H6a
H3a H2a
H9a
H1a
H8a
exogenous latent variables endogenous latent variables
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 11
Notationsξ1
ξ2
ξ3
η1
η2
η3
ξ1 : Priceξ2: Product Char.ξ3: Compatibilityη1: Brand η2: WoM η3: Purchase intention
3. Research Model
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 12
3. Research ModelH1a: The brand has positive significant impact on purchase intention of home VGC
H2a: Compatibility has positive significant impact on purchase intention of home VGC
H3a: The compatibility has positive significant impact on WOM communication.
H4a: The price has positive significant impact on purchase intention of home VGC
H5a: The product characteristic has positive significant impact on the brand
H6a: The product characteristic has positive significant impact on WOM communication.
H7a: The product characteristics has positive significant impact on brand..
H8a: The WOM communication has positive significant impact on the brand.
H9a: The WOM communication has positive significant impact on purchase intention.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 13
4. Analysis
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 14
Preliminary analysis – 100 Samples
Scale Measure Composite Reliability (CR)
To measure items whether to be internal consistency on the variable. The value of items above 0.7 is an acceptable.
Average Variance Extracted (AVE) To measure the total variances in the indicators which estimated by
latent variables. The value of items above 0.7 is an acceptable.
4. Analysis
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 15
Variables and items
Construct reliability and validity
Standardized Factor Loading
CompositeReliabilities
Average Variance Extracted
Price
P1 0.53
0.83 0.77P2 0.75
P2 0.69Product Characteristics
PC1 0.85
0.96 0.90PC2 0.82
PC3 0.59Compatibility
C1 0.76
0.95 0.86C2 0.70
C3 0.56Brand
B1 0.80
0.90 0.75B2 0.87
B3 0.74Word-of-mouth Communication
WOM1 0.76
0.90 0.74WOM2 0.76
WOM3 0.81Purchase Intention
PI1 0.73
0.92 0.79PI2 0.80
PI3 0.84
Standardized factor loading, internal composite reliability and average variance extracted of the scale
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 16
4. Analysis
Model fit indicesGFI 0.8
2AGFI 0.7
9PGFI 0.6
7RMR 0.1
1RMSEA 0.0
7CFI 0.8
0NFI 0.7
5
Preliminary test result (GLS, 100 Samples)
Price Purchase Intention (Not Sign.)Price Brand (Not Sign.)Compatibility Purchase Intention (Negative Impact)
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 17
Path
Model: 1, 2
Price → Brand
Price →Purchase intention
Product Characteristics →Brand
Product Characteristics → WoM
Compatibility→ Purchase Intention
Compatibility →Word-of-mouth
Brand → Purchase Intention
Word-of-mouth →Brand
Word-of-mouth → Purchase Intention
Model 3,4 (For Comparative Analysis)
Price → Purchase Intention
Product Characteristics →Purchase Intention
Compatibility → Purchase Intention
Brand →Purchase Intention
Word-of-mouth → Purchase Intention
Model fit indices GFI, AGFI, PGFI, RMR, RMSEA, CFI, NFI
ξ1
ξ2
η1
ξ3
η2
η3
ξ3
ξ2
η1
η2
η3
η3
ξ1
ξ2
ξ3
ξ4
ξ5
η3
ξ2
ξ3
ξ4
ξ5
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 18
Model fit indices Goodness-of-fit index (GFI), Adjusted goodness-of-fit index (AGFI), Parsimonious goodness-of-fit index (PGFI), Root mean residual (RMR) Root mean squared error of approximation (RMSEA), Comparative fit index (CFI), Normed fit index (NFI),
Significant determinant Explanatory power
Squared multiple correlation (SMC),
5. Model Identification
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 19
250 samples Gender
Male: 162 Female: 99
Age < 20: 25 21-30: 190 31-40: 35
Experience on VGC < 1: 34 2-5: 46 6-10: 115 >11 : 55
Occupation Student: 172 Private sectors: 26 Govt. agencies: 10 Freelance: 36 Professional players: 6
5. Model Identification
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 20
5. Model IdentificationThe structural model results for Model 1ML
Results:1)All hypotheses are significant except H8a. 2)The brand is affected extremely through WoM communications.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 21
5. Model IdentificationThe structural model results for Model 1GLS
Results:1)The results is the same as Model 1ML. 2)The model performance is the poor in the relative to model 1ML.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 22
5. Model IdentificationThe structural model results for Model2ML
Results:1) The model performance is well but its explanatory power of purchase intention is somewhat poor in comparison to Model1ML.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 23
5. Model IdentificationThe structural model results for Model2GLS
Results:1)The residuals are somewhat higher in relative to Model1ML and Model2ML except for GFI. 2) The explanatory power of word-of-mouth communication is poor for predicting purchase intention.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 24
5. Model IdentificationThe structural model results for Model3ML The structural model results for Model3GLS
Results:1) In either model, its significant impact are not found except for H1a 2) Both performance of model are extremely poor.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 25
5. Model IdentificationThe structural model results for Model4ML The structural model results for Model4 GLS
Results:1) In either model, the residuals are poor above the average. 2) Both explanatory power on purchase intention are better in comparison to Model3. (Model4ML:SMC (PI)=20%; model 4GLS: SMC (PI)=13%)
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 26
5. Model IdentificationPaths / Estimation Method Model 1ML Model 1GLS Model 2ML Model 2GLS
γ11 (Price → Brand) 0.2404** 0.0983
γ13 (Price →Purchase intention) 0.2688** -0.0647
γ21 (Product Characteristics →Brand) 0.2582** 0.2132** 0.3196** 0.3181***
γ22(Product Characteristics →Word-of-mouth) 0.3560** 0.2341** 0.3522** 0.2803**
γ33 (Compatibility→ Purchase Intention) -0.2168* -0.2168* -0.2191 -0.2736*
γ32 (Compatibility →Word-of-mouth) 0.2532*** 0.1753* 0.2520** 0.1678*
β13 (Brand → Purchase Intention) 0.2281* 0.1825 0.3401*** 0.2564***
β21 (Word-of-mouth →Brand) 0.4779*** 0.4378*** 0.4698*** 0.4185***
β23 (Word-of-mouth → Purchase Intention) 0.012 -0.0444 -0.0264 -0.0573
Model fit indicesGFI 0.89 0.90 0.91 0.92AGFI 0.84 0.85 0.86 0.88PGFI 0.70 0.70 0.67 0.69RMR 0.10 0.16 0.08 0.13RMSEA 0.07 0.05 0.07 0.09CFI 0.86 0.70 0.90 0.79NFI 0.79 0.55 0.85 0.65
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 27
Paths / Estimation Method Model 3 ML Model 3GLS Model 4ML Model 4GLS
γ11 (Price → Purchase Intention) -0.2730*** -0.00459
γ21 (Product Characteristics →Purchase Intention) 0.1950 -0.0813 0.3264** 0.2237*
γ31 (Compatibility → Purchase Intention) -0.0176 -0.00516 -0.2258* -0.2455*
γ41 (Brand →Purchase Intention) 0.1646 -0.00642 0.1924** 0.1024
γ51 (Word-of-mouth → Purchase Intention) -0.0284 -0.0558 -0.0428 -0.0069
Model fit indicesGFI 0.75 0.85 0.86 0.91
AGFI 0.66 0.79 0.79 0.86
PGFI 0.61 0.69 0.68 0.70
RMR 0.17 0.23 0.15 0.20
RMSEA 0.13 0.08 0.09 0.06
CFI 0.56 0.42 0.82 0.73
NFI 0.52 0.35 0.77 0.60
5. Model Identification
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 28
5. Model Identification
ξ1
ξ2
ξ3
η2 η3
η1
Model fit indicesGFI 0.87
AGFI 0.82
PGFI 0.68
RMR 0.11
RMSEA 0.08
CFI 0.83
NFI 0.76
Yet another alternative
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 29
5. Model Identification
Direct effects Indirect effects Total effects
Variable B WOM PI BWO
MPI B
WO
MPI
P 0.22 0.26 0.05 0.22 0.31
PC 0.25 0.35 0.16 0.05 0.41 0.35 0.05
C 0.25(-
0.21)0.12 0.003 0.12 0.25 -0.18
B 0.22 0.22
WOM 0.47 0.012 0.10 0.47 0.11
1 2 31 2
For example, The direct effect of price toward purchase intention is 0.26 and the indirect effect through brand is calculated by multiplying an effect the price on brand and an effect the brand on purchase intention: 0.22*0.22=0.05. Consequently, the total effect between price and purchase intention is 0.26+0.05=0.31.
ξ1
ξ2
η1
ξ3
η2
η3
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 30
Hypotheses
γ11 (Price → Brand)H5a
Support
γ13 (Price →Purchase intention)H4a
Support
γ21 (Product Characteristics →Brand)H7a
Support
γ22 (Product Characteristics →Word-of-mouth Communication)H6a
Support
γ33 (Compatibility→ Purchase Intention)H2a
Support
γ32 (Compatibility →Word-of-mouth Communication) H3a
Support
β13 (Brand → Purchase Intention)H1a
Support
β21 (Word-of-mouth Communication →Brand)H9a
Support
β23 (Word-of-mouth Communication → Purchase Intention)H8a
Not Support
6. Findings
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 31
Conclusions
Brand Perceived quality of a VGC
Word-of-Month Communication Professional players opinion No direct impact on the purchase intention
Compatibility should not be a focus on marketing strategy
Professional opinions (blogs) should be adopted as a strategy to boost the sales of a VGC.
J. Sum & M. Liao, IEC NCHU Purchase Intention Model for VGC 32
Conclusions
Evaluation copies should be released for professional players to assess.
Official forums or blogs should be set up for them to discuss and feedback on those VGCs being evaluated.