257

An empirical analysis of consumer durable

replacement intentions *
Barry L. Bayus 1. Introduction
Uniuersiry of North Carolina, Chapel Hill, NC 27599, USA
The high penetration of consumer durables
such as refrigerators, clothes washers, vac-
Sachin Gupta
uum cleaners, and coffee makers implies that
Cornell Vniuersi@, Ithaca, NY 14853, USA
a large portion of currently observed sales
Final version received April 1992 are due to replacement purchases. For exam-
ple, according to industry sources, in 1985
replacements accounted for 88% of refriger-
Despite the dominant role of replacement purchases in ator sales, 78% of washer sales, 77% of vac-
many durable categories, previous research has not empha-
sized modeling replacement behavior. In this paper, we de-
uum cleaner sales, and 67% of coffee maker
velop a descriptive model for replacement intentions based on sales in the US (Merchandising, 1986). As
variables associated with product and household characteris- the installed base of products ages over time,
tics, and empirically estimate this model with cross sectional
data for a set of home appliances. Results indicate that the
replacement sales are also expected to in-
perceived condition of the currently owned unit and its age crease. Thus, a better understanding of the
are significantly related to replacement intentions. Whether durable replacement process can be impor-
or not a spouse is working and expected future household
tant for areas such as sales forecasting, mar-
financial situation are also significant explanatory variables.
Implications and directions for future research are also dis- keting new and existing products, and pro-
cussed. duction planning. Knowledge of the impor-
tant variables related to the replacement de-
cision may also enable manufacturers to de-
velop more precise targeting strategies
through the use of database marketing tech-
niques (Bayus, 1991b).
Despite the dominant role of replacement
purchases in many durable categories, previ-
ous research has not paid much attention to
the replacement decision. The aggregate de-
mand for consumer durables has, however,
Correspondence to: B.L. Bayus, Kenan-Flagler Business received considerable research effort (e.g.,
School, University of North Carolina, Chapel Hill, NC 27599, see the reviews in Dickson and Wilkie, 1978;
USA
Pickering, 1981). Studies have empirically in-
* This research was conducted while the first author was a vestigated variables related to ownership of
faculty member at Cornell University. Funding for the data durables (e.g., Nickels and Fox, 1983; Kim,
collection was provided by the Johnson Schools Institute
for Research in Marketing at Cornell University. Special
19891, durable expenditures (e.g., Strober and
thanks are extended to Peter Dickson, Dick Wittink, the Weinberg, 1977; Weinberg and Winer, 1983;
editor and two reviewers for their comments on an earlier Van Raaij and Gianotten, 19901, and proba-
draft.
bility of purchase (e.g., Winer, 1985b). Al-
Intern. J. of Research in Marketing 9 (1992) 257-267 though demand for durable goods is concep-
North-Holland tualized to come from first time purchases,

0167-8116/92/$05.00 0 1992 - Elsevier Science Publishers B.V. All rights reserved

258 B.L. Bayus, S. Gupra / Consumer durable replacement intentions
replacements, and purchases of additional
units (e.g., Pickering, 1981; Winer, 1985a),
few empirical studies have considered re-
placement behavior. Attention has tended to
focus on the influence of household charac-
teristics (e.g., income, working wife) on pur-
chase, while product characteristics (e.g.,
condition of a currently owned unit) are gen-
erally ignored. By and large, matching empir-
ical data with econometric models has re-
sulted in disappointing results in terms of
overall statistical fits (e.g., Winer, 1985b) and
predictive ability (e.g., McNeil, 1974). An
exception is Bayus et al. (1989) in which very
good forecasting results for color televisions
were achieved by modeling the separate de-
mand components of sales.
In this paper, we (1) develop a descriptive
model for replacement intentions based on
variables representing product and house-
hold characteristics, and (2) use cross sec-
tional data for a set of home appliances to
empirically estimate this replacement model.
Our results indicate that the perceived con-
dition of the currently owned unit and its age
are significantly related to replacement in-
tentions. Whether or not a spouse is working
and the expected future household financial
situation are also significant explanatory
variables. Importantly, we find no intrinsic
product specific effects (i.e., the product spe-
cific intercepts in a logit model are not statis-
tically significant).
In the next section, the related literature
for consumer durable demand is reviewed. A
model of durable replacement intentions is
then developed. The sample and data col-
lected are next described, and the dependent
and independent variables are defined. Re-
sults based on multivariate logistic regression
analyses are then discussed. Finally, implica-
tions of these findings and suggestions for
further research are discussed.
2. Related literature
Major research thrusts in the consumer
durables area have included the following
topics: (1) information search and decision
making (e.g., see the review in Beatty and
Smith, 19871, (2) planning of purchases and
the acquisition sequence of durables (e.g.,
Kasulis et al., 1979; Dickson et al., 1983;
Bayus and Rao, 1989), and (3) post-purchase
behavior (the disposition of durables-e.g.,
Jacoby et al., 1977; DeBell and Dardis, 1979;
consumer dissatisfaction and complaint be-
havior-e.g., Tse and Wilton, 1988). None of
these efforts, however, explicitly studies con-
sumer replacement behavior.
Two recent efforts investigate the timing
of replacement purchases for single durable
products. Antonides (1990) empirically stud-
ies the replacement behavior (conditional on
a failure) for washers and finds that income
and household size are positively related to
replacements (as opposed to repairing the
item). Bayus (1991a) reports that demo-
graphic characteristics, attitudes and percep-
tions, and search behavior of consumers
trading in an automobile are significant ex-
planatory variables of the timing of automo-
bile replacements.
Replacement demand is included in the
general conceptual model for consumer
durable demand proposed by Pickering
(1981) and revised by Winer (1985a). Based
on a review of the major efforts concerned
with predicting durable demand, Pickering
(1981) proposes a behavioral model in which
demand is a function of purchase expecta-
tions (i.e., intentions). Purchase expectations
in turn are modeled as a function of personal
financial circumstances and expectations
(which is related to consumer confidence),
personal circumstances (e.g., household
move, marriage), orders of acquisition of new
 B.L. Bayus, S. Gupta / Consumer durable replacement intentions
durables, rates of depreciation of existing
units, and current and future expectations of
product characteristics. Dynamic and feed-
back effects are also considered by allowing
unanticipated events (e.g., product failure,
special price/ promotion, financial windfall,
unavailability of desired product) to affect
the demand for a particular durable.
As conceptualized in Pickering (1981), re-
placement demand involves an implicit com-
parison of the utility likely to be derived
from the purchase of a new item as com-
pared with the utility obtained from the ex-
isting unit. He suggests that this comparison
will depend on the age of the existing unit,
its reliability, an assessment of whether it is
likely to break down or require replacement
in the near future, and to a lesser extent, the
perceived attractiveness of new, more up to
date units available in the marketplace.
However, no detailed operationalization of
variables which influence replacement pur-
chases is given, nor are we aware of any
study which has empirically estimated the
influence of these variables on replacement
demand.
3. A model of durable replacement inten-
tions
In this section, a descriptive model of re-
placement intentions for a consumer durable
is developed. Variables associated with prod-
uct and household characteristics are consid-
ered as predictors. Intentions are expected
to be an important indicator of replacements
since durable purchases are considered a
planned purchase (Pickering, 1984). Empiri-
cal studies by Morrison (1979), Kalwani and
Silk (19821, and Jamieson and Bass (1989)
also demonstrate a strong relationship be-
tween stated intentions and actual purchases
of durables. Kalwani and Silk (1982) further
259
find that durable purchase intentions are lin-
early related to purchase behavior.
We can specify the functional relationship
for replacement intentions as
R(X) =g(X) +e, (1)
where g(X) is the deterministic component
of replacement intentions and is dependent
on the set of explanatory variables X. Here,
E is the error term (stochastic component) of
intentions. The set of variables in X include
characteristics of the product currently
owned and household characteristics. Fol-
lowing the conceptual model proposed by
Pickering (1981), possible effects due to the
stock of durables owned on replacement in-
tentions for a particular product are not con-
sidered (i.e., we assume the indirect utilities
of product replacement are separable). Re-
laxing this assumption is left for future re-
search.
Assuming that the error term and is iid
according to a Type I extreme value distribu-
tion, (1) can be transformed into the familiar
logistic function. Letting P denote the prob-
ability of replacing a durable, the model is
P=l/.[l+exp(-CY-X/3)], (2)
where X is the vector of explanatory vari-
ables, j3 is the coefficient vector, and a is an
intercept term. We note that the marginal
impact on the replacement probability due to
changes in an explanatory variable (say xi) is
pjP(l - PI. Because P is a function of sev-
eral explanatory variables, the marginal im-
pact of a single variable thus depends on the
values of the other variables. In other words,
the interactive effects of several explanatory
variables are implicitly included in (2). Since
the dependent variable we will analyze is
binary (likely or not likely to replace),
As part of the empirical study described later in this paper,
replacement purchase data for refrigerators and coffee
makers were also collected along with intentions data. Re-
sults not reported in this paper indicate that the same set of
explanatory variables for replacement intentions and pur-
chase were significant for both these products.
260 B.L. Bayus, S. Gupta
maximum likelihood methods can be used to
estimate the parameters of (2); the logistic
regression package (LOGIST) implemented in
SAS is used in our analyses (Harrell, 1986).
We next discuss the specific variables we
use to account for product and household
characteristics.
3.1 Product characteristics
The perceived condition of the existing
unit is expected to be an important variable
for replacement intentions (e.g., households
owning a unit in poor condition will usually
have higher replacement intentions than
those owning a unit in good working condi-
tion). Current unit condition is a function of
physical wear and tear (i.e., usage), mainte-
nance and repair efforts, and the quality of
the original brand purchased.
We also expect that the age of the cur-
rently owned unit will be an important indi-
cator of product obsolescence. This obso-
lescence may be due to the desire for new
technology and/or features, image or styling
preference changes (Bayus, 1991a), and
changes in price expectations (Winer, 1985b).
In order to describe this aspect of consumer
durables, we consider the product specific
hazard rate. The duration time (i.e., time
between purchases or age of the existing
unit) is assumed to have some p.d.f. f(t) and
c.d.f. F(t). The hazard rate h(t) =f(t>/[l -
F(t)] is the likelihood that a replacement
purchase is made for a unit of age t, given
that it was not replaced in (0, t). For durable
purchases, an increasing hazard rate is ex-
pected (i.e., the probability of a replacement
purchase increases as the units age in-
creases). As discussed in Schmittlein and
Helsen (1990), the Weibull distribution (f(t)
=y/(y tY- exp[ - ( t/f3)Y]> captures several
possible hazard forms, including concave in-
creasing hazards (1 < y < 2), linearly increas-
ing hazards (y = 2), and convex increasing
hazards (y > 2). Based on empirically fitted
/ Consumer durable replacement intentions
replacement distributions for several
durables, Weibull distributions with y close
to 2 provide very good fits (Bayus, 1988;
1991a). Thus, the Rayleigh distribution (i.e.,
a Weibull with y = 2) is used to model
durable hazard rates. For the Rayleigh, h(t)
= 2et.
3.2 Household characteristics
Although there is some disagreement over
the empirical significance of specific mea-
sures, previous studies indicate that the gen-
eral variables of stage in the family life
cycle and need for convenience are im-
portant determinants of durable purchases.
Strober and Weinberg (1977) and Weinberg
and Winer (19831, for example, find that
younger households are more likely to be in
the durable acquisition stage (since they tend
to own fewer durables). Winer (1985b) finds
that age of household head exhibits a nonlin-
ear relationship (i.e., U-shaped) to purchase
probability. His results suggest that replace-
ment demand is associated with older house-
holds. Households in the later life cycle
stage are more likely to need a replacement
due to cumulated usage over time and/or
may be better able to afford a replacement
(since young children are generally not pre-
sent in the household). Contrary to Strober
and Weinberg (19771, Weinberg and Winer
(19831, and Winer (1985b), Kim (1989) finds
that wifes employment is significantly re-
lated to durable ownership, even after con-
trolling for income and life cycle effects.
Finally, there is general agreement that a
recent move is associated with durable pur-
chases (e.g., Winer, 1985b; Wilkie and Dick-
son, 1985). Based on this literature, we hy-
pothesize that older households, households
with working wives, and households that have
recently moved are more likely to have posi-
tive replacement intentions for currently
owned durables.
 B.L. Bayus, S. Gupta / Consumer durable replacement intentions 261

Generally speaking, household income is a Table 1

Explanatory variables and hypotheses
significant and positive variable in studies of
durable ownership (e.g., Nickels and Fox, Variable Definition Hypothesized
direction
19831, durable expenditures (e.g., Strober and of influence
Weinberg, 1977; Weinberg and Winer, 1983; CONDITION reported condition of negative
Van Raaij and Gianotten, 1990), and proba- unit currently owned
bility of purchase (e.g., Winer, 1985b). In a positive
HAZARD calculated hazard rate
study of the multidimensional measure of of unit currently owned
consumer confidence (including current and whether or not household positive
SPOUSE
expected evaluations of the general eco- has a working wife
nomic situation, household finances, price reported age of negative
HHAGE
increases, and savings), Van Raaij and Gian- household head
otten (1990) conclude that income is the most squared age of positive
HHAGE
important determinant of consumer durable household head
spending. A factor called household finan- whether or not household positive
MOVED
cial situation (composed of perceived cur- has recently moved
rent and expected household finances) was INCOME reported gross annual positive
also significant, while another factor termed household income
development of the general economic situa- EXP_ expected future positive
tion (composed of perceived current and FINANCES household financial
expected general economic situation, price situation

increases, and unemployment) was not a sig-

nificant explanatory variable of durable
spending. Based on these and other related lifetimes, consumer durables also tend to be
studies, we hypothesize that the effects of purchased infrequently. These inherent
household income and expected future product and decision characteristics imply
household financial situation on replacement that relatively large samples are needed to
intentions are positive. investigate the replacement process (see also
Cox et al., 1983).
3.3 Summary Unfortunately, publicly available panel
data sets (e.g., Surveys of Consumer Finances,
Based on the previous discussion, the re- University of Illinois Survey Research Cen-
sultant set of eight explanatory variables and ter) do not collect data on key aspects associ-
their hypothesized direction of influence on ated with the replacement decision (e.g., age
durable replacement intentions is summa- and condition of currently owned units).
rized in Table 1. However, an opportunity to collect cross sec-
tional information on the variables in Table
1 was provided by the Arkansas Household
4. The empirical study Research Panel, organized and maintained
by the University of Arkansas in the US.
4.1 Data Households were mailed a four-page ques-
tionnaire in January 1990 concerning their
An empirical analysis of durable replace- ownership and twelve month purchase inten-
ments requires that consumers have experi- tions (four-point scale) for several home ap-
ence with (e.g., currently own) the products pliances: stove, refrigerator, washer, color
being considered. Due to their relatively long television, video cassette recorder, vacuum
262 B.L. Bayus, S. Gupta / Consumer durable replacement intentions

Table 2
Sample profile

Respondents Non- Total

respondents
Mean age HH head 56 years 53 years 55 years
> High school education 59% 57% 58%
Gross annual income
< $35K 64% 62% 64%
$35K-$6SK 31% 31% 31%
> $65K 5% 7% 5%
Married 76% 80% 77%
Spouse employed 30% 40% 33%
Sample size 407 154 561

cleaner, and coffee maker. This set of appli-
ances was selected to represent a range of
product categories. Prior research (Pickering
et al., 1973; Bayus and Carlstrom, 1990) indi-
cates that these appliances can be separated
into three groups based on perceptual mea-
sures: major home appliances (stove, re-
frigerator, washer, vacuum cleaner), house-
wares (coffee maker), and entertainment
items (color TV, VCR).
Information on the age (in years) and con-
dition (three-point scale: good, fair, poor) of
currently owned units was also collected. De-
mographic data such as age of household
head (in years), income (eleven-point or-
dered scale), and whether a spouse was em-
ployed (if married) were also available. Fi-
nally, information on the length of residence
at the current address and expected future
household financial situation was collected
(three-point scale: better, same, worse than
now). *
Completed questionnaires were received
from 407 households owning their home or
condominium, representing a response rate
of over 70%. The percentage of households
owning these eight home appliances was gen-
erally over 70%. Demographic profiles of the
entire panel and the samples of respondents
and nonrespondents are given in Table 2.
Generally speaking, the sample of respon-
dents is a little older and has a smaller
percentage of households with a working
spouse than the nonrespondents. No statisti-
cally significant differences exist in terms of
household income, education of the house-
hold head, and the percentage of married
households.
Most of the variables in Table 1 have
natural definitions based on the survey ques-
tions. Replacement intentions were di-
chotomized into positive (1 = definitely or
likely) and negative (0 = not likely or defi-
nitely not) intentions by combining response
categories. 3 Since unit condition was re-
ported using a three-point scale, two dummy
variables are used to represent perceived unit
condition (GOOD = 1 if unit condition is
good, 0 otherwise; POOR = 1 if unit condi-
tion is poor, 0 otherwise). Similarly, expected
future household financial situation is repre-
sented by two dummy variables (BETTER =

2
We note that Van Raaij
point scale (much better
measure future household
ses this scale is assumed
Since the true nature of
lished, we use a three-point
ordinal properties.
and Gianotten (1990) use a five- Since replacement intentions were collected using a four-
to much worse than now) to point scale, estimation procedures such as multinomial logit
financial situation. In their analy- or probit, or ordered logit could also be used. However,
to have equal interval properties. other analyses (using an ordered logit model) not reported
such a scale has not been estab- in this paper indicate that the main conclusions remain
ordered scale, but only assume unchanged. Thus, for ease of interpretation we report re-
sults based on a binary dependent variable.
 B.L. Bayus, S. Gupta / Consumer durable replacement intentions 263

1 if expected financial situation is better than tion for each of the eight products consid-
now, 0 otherwise; WORSE = 1 if expected ered individually; and (2) the product charac-
financial situation is worse than now, 0 oth- teristics summarized in Table 3 suggest that
erwise). Relating these dummy variables to the expected relationship between unit age,
Table 1, POOR and BETTER are hypothe- unit condition, and intentions are similar for
sized to have positive coefficient signs, and each separate product. Although the model
GOOD and WORSE are hypothesized to be developed in Section 3 does not consider
negatively related to replacement intentions differing effects by product category, we al-
and purchase. MOVED is defined as 1 if the low for intrinsic product specific effects in
household has lived at the present address the logistic regression model (i.e., product
for less than one year, 0 otherwise. The specific constants; see Chintagunta, 1992) by
HAZARD rate for product i is calculated as defining six appropriate dummy variables:
28,tij, where tij is the age of product i for STOKE (1 if stove, 0 otherwise), FRlDGE (1
household j and the parameter Bi is found if refrigerator, 0 otherwise), WASHER (1 if
using the overall mean replacement age of clothes washer, 0 otherwise), CW (1 if color
product i (CL= i(rr/0)/). Estimates of TV, 0 otherwise), VCR (1 if VCR, 0 other-
mean product replacement ages are available wise), and VACUUM (1 if vacuum cleaner, 0
in trade publications and are given in Table otherwise). Here, coffee maker is assumed to
3. be the base product (i.e., if all product
dummy variables equal zero). Everything else
4.2 Analysis method being equal, if a particular appliance has
some inherent replacement importance or
In order to estimate the replacement in- priority in the household, then we expect
tention model, we pooled the data for the the dummy variable for that product to be
407 respondent households across the seven statistically significant.
products. Aftering deleting observations with
missing values, the total sample size available
for analysis is 2132. Supporting this decision 5. Resdts
are two factors: (1) due to the nature of 5.1 Model fit
consumer durables and the replacement de-
cision, a relatively small number of house- The overall fit of the logistic regression
holds indicated a positive replacement inten- model is very good. Classification results for

Table 3
Product characteristics for home appliances studied

Stove Refrigerator Washer Color VCR Vacuum Coffee

TV cleaner maker
Mean replacement age (years) a 15 13 12 8 7 11 3

Mean unit age (years)

Positive replacement intentions 15.8 14.5 11.5 9.6 4.5 11.2 4.8
Negative replacement intentions 11.0 9.0 8.0 5.7 2.9 7.2 3.8

Positire replacement intentions (%)

Unit in good condition 4b 2 3 5 3 4 0
Unit in poor condition 64 30 100 80 100 77 100

Sample size 371 360 368 373 259 366 35

a From Appliance, September 1984.

Of all households owning a stove in good condition. 4% had positive replacement intentions.
264 B.L. Bayus, S. Gupta / Consumer durable replacement infentions

this model are in Table 4. The percentage of Table 5

Estimation results
correctly classified cases is (111 + X308)/
2132 = 90.0%. This is better than a random Coefficient *-statistic

proportional chance model, which yields a CY 5.88 0.07

STOVE - 7.78 0.12
hit rate of p* + (1 -p)* where p is the
FRIDGE - 8.44 0.14
prior probability of positive intentions. Esti- WASHER - 7.81 0.12
mating p = 0.131 based on the observed pro- CTV - 7.90 0.12
portion of positive intentions, classification VCR - 8.08 0.13
VACUUM - 8.07 0.13
accuracy for a random model is 77.2%. Al- CONDITION
though not shown, correct predictions for GOOD - 2.64 569.04 *
individual products were over 85% in all POOR 1.68
HAZARD 3.71 13.35 *
cases. Due to the relatively small sample SPOUSE 0.52 5.94 *
percentage of positive intentions (280/2132 HHAGE 0.00 0.00
= 13.1%), it is not surprising that the logistic HhYGE = 0.00 0.15
MOVED 0.30 1.33
regression model predicts negative replace-
INCOME 0.02 0.20
ment intentions better than positive inten- EXP_ FINANCES a
tions (98% correct for negative intentions as BETTER 0.56 12.73 *
opposed to 40% correct for positive inten- WORSE -0.31
Model chi-square 609.04 *
tions). This may also indicate that the model (d.f.) (16)
does not capture all of the important factors
a Chi-square statistic calculated as the difference in model chi
underlying the replacement decision. We dis- square with and without the two dummy variables repre-
cuss this point in a later section. senting this variable (e.g., see Hosmer and Lemeshow, 1989).
* Significant at 0.01 level.

5.2 Estimation results

The estimated coefficients for the logistic dummy variables are significant, indicating
model are reported in Table 5. The model no intrinsic product specific effects.
chi-square is highly significant. The coeffi- Consistent with Kim (19891, we find that
cients of the four significant variables are in wifes employment status is an important
the hypothesized direction. The product variable related to replacement intentions.
characteristics of perceived unit condition Supporting the results of Van Raaij and Gi-
and hazard rate are significant, and show anotten (19901, we find that expected house-
negative and positive effects, respectively. hold financial situation is significantly associ-
Whether a spouse is working and expected ated with replacement intentions. Contrary
future household financial situation are posi- to the results of Strober and Weinberg (19771,
tive and significant. None of the product Weinberg and Winer (19831, and Winer
(1985b) for durable ownership and probabil-
ity of acquisition, we find no significant ef-
Table 4
fects for age of household head on replace-
Overall model fit
ment intentions. Unlike other studies which
Actual Predicted replace- Total
find that income is a significant variable for
replacement ment intentions
intentions durable ownership (Nickels and Fox, 19831,
Positive Negative
durable expenditures (Strober and Wein-
Positive 111 169 280
Negative 44 1808 1852
berg, 1977; Weinberg and Winer, 1983; Van
Raaij and Gianotten, 19901, and purchase
Total 155 1977 2132
probability (Winer, 1985b), our results do not
 B.L. Bayus, S. Gupta / Consumer durable replacement intentions
show a significant income effect for replace-
ment intentions. However, this result may be
due to the sample analyzed (i.e., respondents
that owned their home) and the inclusion of
the spouses working status. Finally, contrary
to our hypothesis, whether a household has
recently moved is not significantly related to
replacement intentions. We note that this
finding may be due to the fact that very few
households in the sample analyzed reported
a recent move.
5.3 Elasticities
Aside from the statistical significance of
the explanatory variables, it is of interest to
consider the substantive implications of the
model. Elasticities of the significant vari-
ables can be calculated by determining the
percentage change in the probability of posi-
tive replacement intentions for a one unit
change in an explanatory variable. Evaluat-
ing the change in intentions for each house-
hold and averaging across households, the
resulting elasticity estimates are in Table 6.
Considering the product characteristics, a households in early 19901, which makes it
one year increase in the age of each product
owned increases the probability of positive
replacement intentions by 2.91% and a wors-
ening of the products condition increases
the probability of positive replacement inten-
tions by over 470%. Although the elasticity
estimates of the four variables cannot be
directly compared due to the different un-
Table 6
Elasticity estimates for positive replacement
Variable
HAZARD
(for 1 year increase in unit age)
CONDITION
(from good or fair to poor)
SPOUSE
(from not working to working)
EXP_ FINANCES
(from poor or fair to better)
265
derlying measurement scales (e.g., it is not
clear that a change in a spouses working
status is the same as a change in product
condition), the values in Table 6 do show the
considerable importance of perceived prod-
uct condition and the hazard rate (which is a
function of the currently owned units age)
on subsequent replacement intentions.
6. Discussion and conclusions
This paper has focused on studying the
nature of consumer durable replacements. A
descriptive model of replacement intentions
was developed and empirically examined for
a set of home appliances.
6.1 Study limitations
Before implications of the results are dis-
cussed, it is important to note some limita-
tions of the study. As always, a general limi-
tation is the use of a specific sample and
single time period (i.e., a sample of Arkansas
difficult to generalize the findings to other
samples or consumers that purchase appli-
ances during other years. In addition, the use
of a mail survey (and potential self-selection
bias in comparison with other methods such
as telephone interviewing) and the potential
inconsistencies associated with self-reported
behaviors limit the generalizability of the
findings.
In this paper, the replacement decision for
a particular product has been studied inde-
intentions pendently of similar replacement decisions
Elasticity faced by a household and/or first purchase
decisions for other durable products (or ex-
2.91 penditure alternatives such as vacations, col-
lege tuition, etc.). Other research (e.g., Ur-
471.89
ban and Hauser, 1986) indicates that house-
18.95 holds do have budget constraints and thus
make decisions between alternatives. Our use
22.70
of cross sectional data limits any conclusions
266 B. L. Bayus, S. Gupta / Consumer durable replacement intentions
about the tradeoffs a household might make
between the set of products owned. Individ-
ual household data, perhaps collected in an
experimental fashion, is needed to study this
issue in greater detail. Studying replace-
ments as a choice among heterogeneous al-
ternatives is also a potential area for future
research (e.g., see Bayus and Rao, 1989).
Although our survey questions were de-
signed to be valid measures of the underlying
constructs in Table 1, due to the nature of
the study (i.e., cross sectional and self-re-
ported) it is possible that the causal direc-
tion of certain relationships is confounded.
This is of particular concern for the measure
of unit condition, i.e., replacement intentions
or a recent purchase might have influenced
the reported unit condition, meaning that
the observed significance of unit condition is
overstated. We examined this possibility and
concluded that such an effect, if operative,
could not entirely account for our findings
concerning unit condition. First, over 85% of
respondents that reported owning a refriger-
ator or a coffee maker in poor condition
specified the reason for making a replace-
ment purchase as old unit broken, ex-
pected old unit to breakdown, or costly
repairs needed. This indicates that the mea-
sure has face validity. Second, across all the
appliances considered, approximately 70% of
respondents stating they would definitely or
were likely to make a replacement purchase
also reported owning an appliance in good or
fair condition. This indicates variability in
the measures of unit condition and inten-
tions.
6.2 Implications
Researchers have suggested that the rea-
son for the poor performance of purchase
intentions in forecasting subsequent sales is
due to measurement and scaling issues (e.g.,
Juster, 1974; Pickering, 1984). Our results
suggest that what is measured is important.
In particular, current unit condition (infor-
mation which is not generally collected) is a
significant explanatory variable of replace-
ment intentions. Since replacements account
for the majority of observed sales of mature
durable categories, including a measure of
unit condition in a model of sales may pro-
vide improved predictive power. Future re-
search might address this question.
Other analyses not reported in this paper
give an initial start in this direction. As dis-
cussed earlier, unit condition is a function of
physical wear and tear, and maintenance and
repair efforts. For six appliances (refrigera-
tor, stove, washer, VCR, color TV, vacuum),
unit age (a proxy for physical deterioration)
is positively and significantly related to re-
ported unit condition, and for four of these
(refrigerator, stove, washer, vacuum> house-
hold size (a proxy for usage) is also positive
and significant. Only in a few cases did a
household in our sample report having made
any expenditures on repairs/ maintenance
for their refrigerator or coffee maker. Future
research needs to refine and extend the
modelling of perceived unit condition across
durable categories.
Finally, our results concerning the impor-
tance of unit age suggest a need to model
and track the age distribution of units in use.
In addition, modelling and estimating the
effects of variables such as price, advertising,
and product enhancements on this underly-
ing age distribution is a promising area for
further research.
References
Antonides. G., 1990. The lifetime of a durable good, Boston,
MA: Kluwer Academic Publishers.
Bayus. B.. 1988. Accelerating the durable replacement cycle
with marketing mix variables. Journal of Product Innova-
tion Management 5, 216-226.
Bayus, B., 1991a. The consumer durable replacement buyer.
Journal of Marketing 5 (January), 42-51.
Bayus, B., 1991b. Applying targeted marketing principles to
consumer durables. MS1 working paper no. 91-108, Cam-
bridge, MA: Marketing Science Institute.
 B.L. Bayus, S. Gupta / Consumer durable replucement intentions 267

Bayus, B. and C. Carlstrom, 1990. Grouping durable goods. chases. Journal of Economic Psychology 10 (November),
Applied Economics, 22 (June), 759-773. 391-409.
Bayus, B. and V. Rao, 1989. A hierarchical utility model for McNeil. J., 1974. Federal programs to measure consumer
the dynamic acquisition of heterogeneous items. Market- purchase expectations, 1946-1973: A post mortem. Jour-
ing Letters 1. 71-80. nal of Consumer Research 1 (December), l-10.
Bayus, B., S. Hong and R. Labe, 1989. Developing and using Merchandising, 1986. 13th Annual consumer survey (Septem-
forecasting models of consumer durables: The case of ber), 2-29.
color television. Journal of Product Innovation Manage- Morrison, D., 1979. Purchase intentions and purchase behav-
ment 6, 5-19. ior. Journal of Marketing 43 (Spring), 65-74.
Beatty, S. and S. Smith, 1987. External search effort: An Nickels, S. and K. Fox, 1983 Buying time and saving time:
investigation across several product categories. Journal of Strategies for managing household production. Journal of
Consumer Research 14 (June), 83-95. Consumer Research 10, 197-208.
Chintagunta, P.K., 1992, Heterogeneity in nested logit mod- Pickering, J., 1981. A behavioral model of the demand for
els: An estimation approach and empirical results, Inter- consumer durables. Journal of Economic Psychology 1.
national Journal of Research in Marketing 9, 2, 161-175. 59-77.
Cox. A., D. Granbois and J. Summers 1983. Planning, search, Pickering. J., 1984. Purchase expectations and the demand for
certainty and satisfaction among durables buyers: A longi- consumer durables. Journal of Economic Psychology 5,
tudinal study. In: R. Bagozzi and A. Tybout teds.), Ad- 341-352.
vances in Consumer Research 10, 394-399. Pickering, J., J. Harrison, B. Isherwood and C. Cohen, 1973.
DeBelI, M. and R. Dardis, 1979. Extending product life: Are goods? Some empirical evidence. Applied Economics
Technology isnt the only issue. In: W. Wilkie fed.), Ad- 5, l-18.
vances in Consumer Research 6, 381-385. Schmittlein, D. and K. Helsen, 1990. Analyzing duration times
Dickson, P. and W. Wilkie 1978. The consumption of house- in marketing research. Wharton School working paper.
hold durables: A behavioral review, MS1 monograph no. Philadelphia, PA: University of Pennsylvania.
78-117, Cambridge, MA: Marketing Science Institute. Strober, M. and C. Weinberg, 1977. Working wives and major
Dickson, P., R. Lusch and W. Wilkie 1983. Consumer acquisi- family expenditures. Journal of Consumer Research 4
tion priorities for home appliances: A replication and (September), 141-147.
extension. Journal of Consumer Research (March), 432- Tse, D. and P. Wilton, 1988. Models of consumer satisfaction
435. formation: An extension. Journal of Marketing Research
Harrell, F., 1986. The LOGIST procedure. In: SAS Users 25 (May), 204-212.
Guide, Cary, NC: SAS Institute. Urban, G. and J. Hauser, 1987. The value priority hypothesis
Hosmer, D. and S. Lemeshow 1989. Applied logistic regres- for consumer budget plans. Journal of Consumer Re-
sion. New York: Wiley. search 12 (March), 446-462.
Jacoby, J., C. Berning and T. Dietvorst 1977. What about Van Raaij, W. and H. Gianotten, 1990. Consumer confidence,
disposition? Journal of Marketing 41 (April), 22-28. expenditure, saving, and credit. Journal of Economic Psy-
Jamieson, L. and F. Bass, 1989. Adjusting stated intention chology 11 (June), 269-290.
measures to predict trial purchase of new products: A Weinberg, C. and R. Winer, 1983. Working wives and major
comparison of models and methods. Journal of Marketing family expenditures: replication and extension. Journal of
Research 26 (August), 336-345. Consumer Research 10 (September), 259-263.
Juster, F., 1974. Commentary on McNeil: Federal program to Wilkie, W. and P. Dickson, 1985. Shopping for appliances:
measure consumer purchase expectations. Journal of Con- Consumers strategies and patterns of information search.
sumer Research 1 (December), 12-15. MSI working paper no. 85-108. Cambridge, MA: Market-
Kalwani, M. and A. Silk, 1982. On the reliability and predic- ing Science Institute.
tive validity of purchase intention measures. Marketing Winer, R., 1985a. A revised behavioral model of consumer
Science 1 (Summer), 243-286. durable demand. Journal of Economic Psychology 6. 175-
Kasulis, J., R. Lusch and E. Stafford, 1979. Consumer acquisi- 184.
tion patterns for durable goods. Journal of Consumer Winer, R., 1985b. A price vector model of demand for con-
Research (June), 47-57. sumer durables: Preliminary developments. Marketing Sci-
Kim. C., 1989. Working wives time-saving tendencies: Durable ence 4 (Winter), 74-90.
ownership, convenience food consumption and meal pur-