Product type

Numerous product classifications have been provided in the marketing literature. The product classification that was adopted for this research project is based on three distinctive attributes: search, experience and credence attributes (Darby & Karni, 1973; Nelson, 1970 ).

Nelson (1970 ) distinguished between products on the basis of search versus experience attributes. Search characteristics can be evaluated prior to purchase and experience characteristics were those attributes that can be discerned only after purchase and consumption. Darby and Karni (1973) extended Nelson’s work and created a new attribute which is called ”credence”, and proposed that credence attributes cannot be judged confidently by consumers even after they purchase and consumption (Darby & Karni, 1973).

Search attributes are qualities of a service or product that can be judged prior to consumption and use of the service or product (e.g. colors of a pair of shoes). Search attributes can be divided into linguistic or cognitive and sensory attributes. Linguistic or cognitive attributes are those that can be described by any written or verbal documentation of a product’s characteristics or benefits, including features like a product’s physical dimensions, ingredients and composition (e.g. size, color). It also includes the physical benefits or

outcomes of a product’s use (e.g. the processor speed in a computer). These can be communicated either in writing or orally in a relatively objective manner (Mittal, 2004).

Sensory attribute refers to the physical features of a product, which interface with human senses (e.g. sound, touch, taste, smell) (cf. Lindaucer, 1972). Since one has to experience sensory attributes with one’s own senses, all of them are deemed to be experiential. In some cases, however, if these attributes can be experienced before purchase, then they can be referred to as search attributes. For example, by tasting a food item before buying, smelling the perfume prior to purchase and so on.

Experience attributes are those qualities of a service or product that need to be experienced by customers themselves (e.g. the quality of a restaurant). To distinguish precisely, experience quality can be divided into experience attributes and experience benefits.

Experience attributes are inherent in the product—it is a characteristic of a product’s composition or ingredients—whereas experience benefits are what a customer realizes after using the product. Sometimes experience attributes are tied to experience benefits. For example, when a customer drinks a cup of coffee, it impacts not only an experience attribute, but also an experience benefit. However, for some attributes are separate from benefits (Mittal, 2004).

Many services are experiential. The quality of service in restaurants, for example, is entirely experiential. But experience in services has a different meaning: what a customer experiences is not the sensory perception, it’s the interactive experience (Mittal, 2004; Ostrom

& Iacobucci, 1995). For example, was the waiter of a restaurant polite or was a clerk in a convenient store courteous? The services need to be experienced at the episode level not the sensory level (Mittal, 2004).

Finally, credence attributes are those characteristics of a service or a product that can’t even be judged or determined after purchasing or using of the service or product (Darby &

Karni, 1973).

In this research, we are not interested in credence products. We only discussed search and experience products.

Earlier research suggests that consumers are more likely to have lower perceived risks when they buy search services or products. Conversely, they perceived higher risks when they buy experience services or products (Mitra, Reiss, & Capella, 1999) because customers can’t identify quality of experience products before purchase but they can identify quality of search products prior to purchase.

It is suggested that there is positive relationship between perceived risk and information search (Murray, 1991; Newman, 1977), which means consumers with higher perceived risks can reduce their perceived risk by elaborating additional information about products or services (Crocker, 1986; D. L. Davis, Guiltinan, & Jones, 1979; Eigler & Langeard, 1977;

Hugstad, Taylor, & Bruce, 1987; Lutz & Reilly, 1973; Zeithaml, 1981). Also, Tam and Ho (2005) suggested that there is an interactive effect between NFC and the level of preference matching in the elaboration of the information, but the results are more salient for high-NFC customers than for low-NFC customers. In their research, preference matching is a concept of customized offers in this study. In other words, high-NFC customers are more likely to deal with the information when they buy customized products. However, there is no significant difference in information elaboration between customized and standard products for low-NFC customers.

The following conclusions can thus be drawn. First, for experience products, high-NFC customers perceive higher risks so they need more information to decrease their perceived risks. When high-NFC customers buy customized experience products, they will deal with information further(Tam & Ho, 2005). Therefore, their perceived risks are reduced. Thus they are more satisfied with customized experience products than standard experience products. As

for low-NFC customers, they also perceived higher risks for experience products. But they won’t elaborate more information when buying customized experience products than standard products (Tam & Ho, 2005). Hence, their perceived risks remain the same. They are not more satisfied with customized experience products than with standard products. The following hypotheses were thus formulated:

Hypothesis 3a: For experience products, high-NFC customers are more satisfied with customized products than with standard products, but there is no significant difference in satisfaction between customized and standard products for low-NFC customers.

Hypothesis 3b: For experience products, high-NFC customers have higher purchase intention for customized products than with standard products, but there is no significant difference in satisfaction between customized and standard products for low-NFC customers.

Second, for search products, when high-NFC customers buy search products, their perceived risks are low. They don’t need additional information, but they will still elaborate the information when customizing. Consequently, their perceived risks are not diminished significantly. Thus they are not more satisfied with customized search products than with standard search products. As for low-NFC customers, again, they won’t elaborate more information when buying customized products (Tam & Ho, 2005). Their perceived risks do not decrease. Hence, they are not more satisfied with customized search products. To summarize, neither high-NFC customers nor low-NFC customers are more satisfied with customized search than with standard search products. Thus, the following hypotheses were developed:

Hypothesis 3c: For search products, there is no significant difference in satisfaction between customized and standard products for both high-NFC and low-NFC customers.

Hypothesis 3d: For search products, there is no significant difference in purchase intention between customized and standard products for both high-NFC and low-NFC customers.

Chapter 3 Research Methodology