More evidence has supported credit card incentive spending since the 1970s. For example, when people have more credit cards, the department stores customer flow will increase (Hirschman, 1979) . Because using credit cards, consumers pay more attention to the benefits of the product relative to the cost of the product. (Promothesh & Randall, 2012). Prelec and Loewenstein (1998) further pointed out that credit cards as medium generated higher consumption than cash because of payment decoupling. The impact of the pain of payment is not immediate on credit cards, and consumers are less able to accurately recall their previous expenditures (Soman, 2001).
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Tokunaga (1993) argues that credit cards are a convenient payment format that allows people to postpone payment, and the painful link is less than cash. Therefore, consumers treat credit cards and cash inconsistently. Soman (2003) proposed the concept of degree of transparency, which is defined as the relative significance of payment. Payment mechanisms have different levels of transparency, and transparency is positively related to payment pain. Conversely, transparency, and consumption are presented negative correlation. Soman proves that using a credit card (vs. cash) will result in a painful decline in perceived payment due to reduced transparency, because it does not resemble a physical form like a banknote, nor does it involve counting.
Hsee's (2010) experiment shows that people are influenced by the medium, instead they choose an option that they didn't like. For example, in his pretest, most students actually prefer vanilla ice cream to pistachio ice cream. In the formal experiment, the recipient was told in the control group that short-term tasks (6 minutes) can get vanilla ice cream,and long-term task (7 minutes) can get pistachio ice cream. In the medium situation, inform the subject of short-term tasks (6 minutes) to get 60 points to exchange vanilla ice cream,and long-term task (7 minutes) to get 100 points to exchange pistachio ice cream. The above points are not other values and transfer. The results show that there are more pistachio ice creams selected under the medium situation (vs. control group), which confirms that people are affected by the medium effect and change their choices.
In summary, among all the medium, cash is the clearest and most connected payment format, that is, the pain of payment is the most connected to the product. When consumers spend in cash, they will be more disgusted with spending and generate more paying for pain.
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2.3 Medium Effect and Hedonic Consumption
Prelec and Loewenstein (1998) suggest that paying in cash leaves a vivid memory trace. When money is separated from the consumer, it will cause payment pain. Each transaction will increase the pain of payment, but credit cards can reduce the pain of payment. Because credit cards only require signatures. Points (medium) just like virtual currency, some people only need to use mobile phone to sense payment, such as Line Points. Therefore, author further infers that the medium will reduce the pain of payment and affect the hedonic consumption like a credit card.
In summary, consumer decisions are affected by the payment format. In particular, consumers pay too much attention to surface information. Consumer uses a medium (such as points) to redeem a product, and ignore how much effort (such as cumulative consumption) to gain the medium.
2.4 Pre-Commitments
People's interpretation of things changes with the perception of psychological distance, which in turn affects people's behavioral responses. When the psychological distance is far away, people tend to interpret things in terms of abstraction, essence, and overall level. When the psychological distance is relatively close, it is easy to explain from the low level of concrete, representation, and local. According to temporal construal theory (Liberman & Trope 1998; Trope & Liberman 2000), people use simpler and more abstract ways of thinking in the distant future. Therefore, People pay attention to the desirability of things. On the contrary, events or situations in the near future turn to specific or low-level ways of thinking, when people pay attention to the feasibility of things.
When the results of the selection are less specific, consumers are more likely to choose luxury goods than cash or necessities. Kivetz (2001) emphasizes the importance
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of pre-commitments to prevent consumers from being affected when time are approaching. He also pointed out that although people have self-restriction. Spending money or time is still indispensable for pleasure, so consumers may pay for luxury in advance. This behavior is same as the concept of self-gift. It is still difficult to allocate resources to luxury goods. Consumers need to make irreversible advance payments so that they don't change their minds in the future. For example, you need to choose between cash rewards and luxury rewards (cruise tours or massages) of the same value before participating in the draw. Consumers who expect maximum value will choose cash (Thaler, 1985), which can be used to buy luxury goods or anything else that consumers expect; however, consumers may prefer to pay luxury rewards in advance to ensure that rewards will not end up on the utility products
While previous studies have explored how credit card and advance payments affect hedonic consumption, the medium coverage of this study is broader and more consistent.
For example, the number of points is different from the pre-commitments and payment decoupling two types of time payment methods, but is paid as immediately as cash.
Author will verify whether different medium also affect the consumer's hedonic consumption propensity.
2.5 Research Hypothesis
Prelec and Loewenstein (1998) suggest that paying in cash leaves a vivid memory trace, so when the money is separated from the consumer, it will cause payment pain, and each transaction will increase the pain of payment. But if it is replaced by a credit card (medium) , purchases only require signatures. It can reduce the pain of payment.
Points (medium) just like virtual currency, some customers only need to pay by mobile phone, such as Line Points, so the author further infers that using medium will reduce the pain of payment and affect the hedonic consumption . This study is based on Hsee
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(2003) that the medium effect of defining a payment format is: "When using a non-cash payment format, consumers focus on the medium itself, ignoring the effort to obtain the medium; thus reducing the pain of payment." Author has the following assumptions:
H1: Different payment formats (cash vs. gift certificate vs. points) will have a tendency to hedonic consumption; in particular. Consumers are more likely to prefer hedonic consumption in medium (vs. cash).
While previous studies have explored how credit card and pre-commitments affect hedonic consumption. Medium coverage of this study is broader and more consistent.
For example, the points are different from the pre-payment and payment decoupling two types of time payment methods, but are paid as cash immediately; that is, the study believes that whether it is pre-payment, simultaneous payment, or delayed payment, due to the medium (vs. non-medium) will allow consumers to ignore the efforts and reduce the pain of payment. Thus, this study has a more complete discussion of this topic.
In addition, if medium payments (such as credit cards), relative to non-medium payments (such as cash), result in reduced pain due to reduced transparency (Soman, 2003), and reduce guilt, thereby reducing hedonic consumption. Then, we can further infer that payment pain should be a mediator of medium effects on hedonic consumption.
Therefore, the author advocates H2:
H2:Pain of payment intermediary a mediator of medium effects on hedonic consumption.
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Chapter Three Study1:The Impact of Payment Formats on Hedonic Consumption
3.1 Study One
3.1.1 Study Design
The main purpose of study 1 was to verify H1. Study 1 uses 3 formats of payment (cash vs. points vs. informing points purchased by cash)between subjects design. The situation in which the design " informing points purchased by cash " is to examine the effectiveness of the medium effect and whether it will be different from the consumer's perceived expenditure. In this study, the notebook computer was used as a utility product, and the luxury handbag was used as a hedonic product. The situations are as follows:
【situation－cash】
Imagine that you are an economically independent office worker. Due to the nature of your business, you often need to make briefings or product introductions with manufacturers or customers, and often travel to other places or abroad, so you want to buy a notebook. On the other hand, you often use the holiday to go shopping with friends or go out for a trip. You think that wearing a luxury handbag is not only good-looking, but also a pleasant way. It is also a way to reward yourself for serious work, so you want to buy a luxury handbag. The luxury handbag is used during holidays and leisure. On this day, when you are hanging out in the store, you will find that the store's L-brand luxury handbag and A-brand notebook are in line with your needs; you know that the price of luxury handbag and notebook in the market is about $15,000~25,000.
Your budget is only $35,000, you may not be able to buy it.
【situation－points】
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Imagine that you are an economically independent office worker. Due to the nature of your business, you often need to make briefings or product introductions with manufacturers or customers, and often travel to other places or abroad, so you want to buy a notebook. On the other hand, you often use the holiday to go shopping with friends or go out for a trip. You think that wearing a luxury handbag is not only good-looking, but also a pleasant way. It is also a way to reward yourself for serious work, so you want to buy a luxury handbag. The luxury handbag is used during holidays and leisure. On this day, when you are hanging out in the store, you will find that the store's L-brand luxury handbag and A-brand notebook are in line with your needs; you know that the price of luxury handbag and notebook in the market is about $15,000~25,000.
You can also redeem the bonus points accumulated in the store.Although your budget is not be able to buy it. However, since you often go to the store to spend, you have accumulated 35,000 bonus points (1 point can be exchanged for NT$1); due to your limited points, you may not be able to redeem them.
【situation－informing points purchased by cash】
Imagine that you are an economically independent office worker. Due to the nature of your business, you often need to make briefings or product introductions with manufacturers or customers, and often travel to other places or abroad, so you want to buy a notebook. On the other hand, you often use the holiday to go shopping with friends or go out for a trip. You think that wearing a luxury handbag is not only good-looking, but also a pleasant way. It is also a way to reward yourself for serious work, so you want to buy a luxury handbag. The luxury handbag is used during holidays and leisure. On this day, when you are hanging out in the store, you will find that the store's L-brand luxury handbag and A-brand notebook are in line with your needs; you know that the price of luxury handbag and notebook in the market is about $15,000~25,000.
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You plan to redeem 35,000 points for the purchase (1 point can be exchanged for NT$1);
due to your limited points, you may not be able to redeem them.
After reading the situation, the subject should answer a question about consumer decision (luxury handbag/notebook), the two question the price of the hedonic/utility product you want to pay for (the most you are willing to spend how much (points) in the luxury handbag/notebook?), the two budget allocation ratio of the hedonic/utility product (I would like to ask how much you want to spend the budget (points) in the luxury handbag/notebook are reasonable?___%).
Then the subject fills in the four-question product type operation check (luxury handbag /notebook makes me feel happy and enjoy; luxury handbag/notebook is necessary and practical for me), two questions purchase (redeem) the guilt of hedonic and utility product (buy/redeem a luxury handbag /notebook will make me feel guilty), the medium of payment (cash) is a perceptive effort or unexpected wealth (I think cash/points used are my efforts/windfall gain), two question purchase (redeem) hedonic and utility product painful (cash/points luxury handbag/notebook makes me feel painful.). The measure of all questions is measured using the Likert seven-point scale (1:very disagree/7:very agree). Finally, the subject completes the questionnaire after completing the personal data.
Although this study considers that the effects of medium are generated through the pain of payment, this experiment also measures perceived effort, perceived guilt, and perceived unexpected wealth because past studies have pointed out that these three variables may affect hedonic consumption, so the author at the same time, verifying whether the payment formats affect perceived efforts, perceived guilt and perceived unexpected wealth, and thus affects hedonic consumption.
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Table 3-1:Study1 Questions
Aspect Questions Reference
Products decision
1. Which product would you choose to buy?
□ luxury handbag □ notebook
(Okada,2005)
Willingness to pay
1. The most you are willing to spend how much (points) in the luxury handbag?
2. The most you are willing to spend how much (points) in the notebook?
(Okada,2005) (points) in the notebook is reasonable?___%
(Okada,2005)
Product type operation check
1. Luxury handbag makes me feel happy and enjoy.
2. Luxury handbag is necessary and practical for me.
3. Notebook makes me feel happy and enjoy.
4. Notebook is necessary and practical for me.
1. Buy luxury handbag makes me feel guilty.
2. Buy notebook makes me feel guilty.
Prelec and
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Effort/Wind fall
1. I think cash/points get by effort.
2. I think cash/points get by windfall.
Prelec and
2. It is painful to pay (redeem) notebook with cash/points.
In order to control the homogeneity of the subjects, and to avoid the results of the experiment because of the experience and knowledge of the subjects, there are 154 valid questionnaires (33% male, average age 21.5). Each student was randomly assigned to one of the three scenarios described above, and the subject was asked to complete a three-page questionnaire (described in the previous section).
3.1.3
Result
In the manipulation check, the author make hedonic score minus utility score (eg.
“Make me feel happy”) minus (eg. “Must be useful and practical for me”). Define
"relative hedonic score" for the target product. The results of the T test showed that notebook (M=-0.62, t=-9.09) and luxury handbag (M=0.76, t=6.89) were utility product and hedonic product for the subjects. In addition, the consumer's perception of guilty (M=2.49) on the purchase (redeem) of the notebook is less than luxury handbag (M=4.01, t=10.11, p <0.01), which is in line with the product type.
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(一)First part (situation－cash vs. situation－points) Main effect
In the first part, the payment formats (cash vs. points) are the independent variables and the gender is covariance. The general linear model (GLM) results are as follows：
(1) Non-medium and medium have significant differences in luxury handbag's willingness to pay (Mcash =8877.18 vs. Mpoints=13404.69, F(1；103)=6.04, p＜0.05)，
The subject's willingness to pay for luxury handbag in the points situation is significantly higher than the cash situation.；(2) Non-medium and medium have no significant differences in notebook's willingness to pay (Mcash =25397.93 vs. Mpoints
=24648.30, F(1；103)=0.17, p＞0.1).；(3) Non-medium and medium are significant marginal in luxury handbag's proportion of budget allocation (M cash =22.6% vs.
Mpoints=32.0%, F(1；103)=3.58, p=0.06)，the ratio of the budget allocation of luxury
handbag in the points situation is significant marginal higher than cash.；(4) Non-medium and Non-medium have no significant differences in notebook's proportion of budget allocation (Mcash =72.5% vs. Mpoints =73.0%, F(1；103)=0.01, p＞0.1). Finally, logistic regression analysis shows that the choice of non-medium and medium are significant marginal (the proportion of choice hedonic product: Mcash=5.5% vs. M points=15.7%, χ 2 (1) = 2.77, p=0.10). The results show that the impact of the medium is mainly on hedonic consumption (not on utility consumption).
Mediator analysis
The authors discuss their effects on possible mediator with the same independent variables and covariance. The GLM results show that: (1) Non-medium and medium are significant differences in windfall (Mcash=2.82 vs. Mpoints=3.63, F(1；103)=7.13, p
＜0.01)，windfall in points situation is significantly higher than cash situation; (2) Non-medium and Non-medium are nonsignificant in efforts (Mcash =5.74 vs. Mpoints =5.36, F(1；
103)=2.21, p＞0.1).；(3) Non-medium and medium have significant differences in pain
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of paying in luxury handbag (Mcash = 4.32 vs. Mpoints=3.59, F(1；103)=5.1, p＜0.05)，
subjects’ pain of paying of luxury handbag in the cash situation is significantly higher than the points；(4) Non-medium and medium are nonsignificant in notebook's pain of paying (Mcash =2.81 vs. Mpoints=2.57, F(1；103)=0.7, p＞0.1).；(5) Non-medium and medium are nonsignificant in luxury handbag of guilt (Mcash =4.06 vs. Mpoints =4.03, F(1；
103)=0.01, p＞0.1)；(6) Non-medium and medium are nonsignificant in notebook (Mcash
=2.41 vs. Mpoints=2.49, F(1；103)=0.12, p＞0.1).
The authors used the same independent variables and covariance, and incorporated the two variables of windfall and hedonic product’s pain of paying into the model. The results showed: (1) Non-medium and medium have significant difference in luxury handbag's willingness to pay (p <0.05), but when pain of paying and windfall added to the model become significant marginal (p<0.1). Windfall is not a mediator, there is no significant difference in luxury handbag's willingness to pay (p>0.1). Therefore, hedonic product’s pain of paying is a mediator, because its willingness to pay for the hedonic product reaches significant marginal (F(1；101)=12.28, p＜0.1).；(2) Non-medium and Non-medium have significant difference in luxury handbag's proportion of budget allocation (p < 0.1), but when pain of paying and windfall added to the model become nosignificant (F(1;101)= 0.97, p>0.1). Windfall is not a mediator, there is nosignificant in budget allocation of the hedonic product (luxury handbag) (p
>0.1).However, pain of paying is a mediator (F(1；101)=17.25, p＜0.01)，because it affects the impact of different payment formats on the proportion of hedonic product (F(1；101)=12.28, p＜0.1).；(3) Non-medium and medium are significant marginal in choice (p<0.1), but when pain of paying and windfall added to the model become nosignificant (p＞0.1). Windfall is not a mediator, because it does not affect hedonic
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consumption (p >0.1), but pain of paying is a mediator which affects the choice of products (χ2(1)=5.42, p <0.05 ).
(二)Second part (situation－cash vs. situation－informing points purchased by cash)
Main effect
In the second part, the payment formats (cash vs. informing points purchased by cash) is the independent variable and the gender is covariance. GLM results are as follows：(1) Non-medium and medium have significant differences in luxury handbag's willingness to pay (Mcash =8317.82 vs. Mpoints=15550.68, F(1；100)=21.9, p＜0.05)，
The subject's willingness to pay for luxury handbag in the points situation is significantly higher than the cash situation.；(2)Non-medium and medium have no significant differences in notebook's willingness to pay (Mcash =25562.86 vs. Mpoints
=23740.47, F(1；100)=1.914, p＞0.1).；(3)Non-medium and medium are significant marginal in luxury handbag's proportion of budget allocation (Mcash =21.4% vs.
Mpoints=38.6%, F(1；100)=15.45, p＜0.01)，the ratio of the budget allocation of luxury
handbag in the points situation is significan marginal t higher than cash.；(4) Non-medium and Non-medium have no significant differences in notebook's proportion of budget allocation (Mcash =73.3% vs. Mpoints =70.1%, F(1；100)=0.59, p＞0.1).；(5) Non-medium and medium have significant differences in product's choice (the proportion of choice hedonic product: Mcash=5.5% vs. M points=16.7%, χ 2 (1)=3.90, p＜0.05). This result shows that even if the subject knows that points are purchased from cash, it will still be affected by the medium effect, which is different from the cash payment in the hedonic consumption tendency.
Mediator analysis
In the second part, the payment formats (cash vs. informing points purchased by cash) is the independent variable and the gender is covariance. GLM results are as
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follows：(1)Non-medium and medium are nosignificant differences in windfall (Mcash
=2.89 vs. Mpoints=3.06, F(1；100)=0.45, p＞0.1).；(2) Non-medium and medium are nosignificant differences in effort (Mcash=5.67 vs. Mpoints=5.55, F(1；100)=0.26, p＞0.1).；
(3) Non-medium and medium are significant differences in handbag's pain of paying (Mcash=4.23 vs. Mpoints=3.35, F(1；100)=9.42, p＜0.01) , handbag's pain of paying in the points situation is significant higher than cash.；(4) Non-medium and medium are significant differences in notebook's pain of paying (Mcash=2.90 vs. Mpoints=2.25, F(1；
100)=6.77, p＜0.05) , notebook's pain of paying in the points situation is significant
100)=6.77, p＜0.05) , notebook's pain of paying in the points situation is significant