257

An empirical analysis of consumer durable

replacement intentions *
1. Introduction

Barry L. Bayus
Uniuersiry of North Carolina, Chapel Hill, NC 27599, USA

Sachin Gupta
Cornell Vniuersi@, Ithaca, NY 14853, USA
Final version

received

April

1992

Despite the dominant

role of replacement
purchases
in
many durable categories,
previous research
has not emphasized modeling replacement
behavior.
In this paper, we develop a descriptive model for replacement
intentions based on
variables associated
with product and household
characteristics, and empirically
estimate this model with cross sectional
data for a set of home appliances.
Results indicate that the
perceived condition
of the currently
owned unit and its age
are significantly
related to replacement
intentions.
Whether
or not a spouse is working and expected
future household
financial situation
are also significant
explanatory
variables.
Implications
and directions
for future research
are also discussed.

Correspondence
to: B.L.
School, University of North
USA

Bayus,
Kenan-Flagler
Business
Carolina, Chapel Hill, NC 27599,

* This research
was conducted
while the first author was a
faculty member at Cornell University. Funding for the data
collection
was provided
by the Johnson
Schools Institute
for Research
in Marketing
at Cornell University.
Special
thanks are extended
to Peter Dickson, Dick Wittink, the
editor and two reviewers for their comments
on an earlier
draft.
Intern. J. of Research
North-Holland

in Marketing

9 (1992) 257-267

0167-8116/92/$05.00

0 1992 - Elsevier

Science

Publishers

The high penetration of consumer durables

such as refrigerators, clothes washers, vacuum cleaners, and coffee makers implies that
a large portion of currently observed sales
are due to replacement purchases. For example, according to industry sources, in 1985
replacements accounted for 88% of refrigerator sales, 78% of washer sales, 77% of vacuum cleaner sales, and 67% of coffee maker
sales in the US (Merchandising, 1986). As
the installed base of products ages over time,
replacement sales are also expected to increase. Thus, a better understanding of the
durable replacement process can be important for areas such as sales forecasting, marketing new and existing products, and production planning. Knowledge of the important variables related to the replacement decision may also enable manufacturers to develop more precise targeting
strategies
through the use of database marketing techniques (Bayus, 1991b).
Despite the dominant role of replacement
purchases in many durable categories, previous research has not paid much attention to
the replacement decision. The aggregate demand for consumer durables has, however,
received considerable research effort (e.g.,
see the reviews in Dickson and Wilkie, 1978;
Pickering, 1981). Studies have empirically investigated variables related to ownership of
durables (e.g., Nickels and Fox, 1983; Kim,
19891, durable expenditures (e.g., Strober and
Weinberg, 1977; Weinberg and Winer, 1983;
Van Raaij and Gianotten, 19901, and probability of purchase (e.g., Winer, 1985b). Although demand for durable goods is conceptualized to come from first time purchases,

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 replacement behavior. Attention has tended to
focus on the influence of household characteristics (e.g., income, working wife) on purchase, while product characteristics
(e.g.,
condition of a currently owned unit) are generally ignored. By and large, matching empirical data with econometric models has resulted 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 demand components of sales.
In this paper, we (1) develop a descriptive
model for replacement intentions based on
variables representing product and household characteristics, and (2) use cross sectional data for a set of home appliances to
empirically estimate this replacement model.
Our results indicate that the perceived condition of the currently owned unit and its age
are significantly related to replacement intentions. 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 specific intercepts in a logit model are not statistically 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 collected are next described, and the dependent
and independent variables are defined. Results based on multivariate logistic regression
analyses are then discussed. Finally, implications 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 behavior-e.g.,
Tse and Wilton, 1988). None of
these efforts, however, explicitly studies consumer replacement behavior.
Two recent efforts investigate the timing
of replacement purchases for single durable
products. Antonides (1990) empirically studies 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 demographic characteristics, attitudes and perceptions, and search behavior of consumers
trading in an automobile are significant explanatory variables of the timing of automobile 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 expectations (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 feedback 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), replacement demand involves an implicit comparison of the utility likely to be derived
from the purchase of a new item as compared with the utility obtained from the existing 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 purchases is given, nor are we aware of any
study which has empirically estimated the
influence of these variables on replacement
demand.

259

find that durable purchase intentions are linearly 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. Following the conceptual model proposed by
Pickering (1981), possible effects due to the
stock of durables owned on replacement intentions for a particular product are not considered (i.e., we assume the indirect utilities
of product replacement are separable). Relaxing this assumption is left for future research.
Assuming that the error term and is iid
according to a Type I extreme value distribution, (1) can be transformed into the familiar
logistic function. Letting P denote the probability of replacing a durable, the model is
P=l/.[l+exp(-CY-X/3)],

3. A model of durable

replacement

inten-

tions

In this section, a descriptive model of replacement intentions for a consumer durable

is developed. Variables associated with product and household characteristics are considered as predictors. Intentions are expected
to be an important indicator of replacements
since durable purchases are considered a
planned purchase (Pickering, 1984). Empirical studies by Morrison (1979), Kalwani and
Silk (19821, and Jamieson and Bass (1989)
also demonstrate a strong relationship between stated intentions and actual purchases
of durables. Kalwani and Silk (1982) further

(2)
where X is the vector of explanatory variables, 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 several explanatory variables, the marginal impact 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
replacement

purchase

study described
data

makers were also collected

sults not reported
explanatory

for

along with intentions

in this paper indicate

variables

chase were significant

later in this paper,

refrigerators

for replacement

and

coffee

data. Re-

that the same set of

intentions

for both these products.

and pur-

260

B.L. Bayus, S. Gupta

/ Consumer durable replacement

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 condition). Current unit condition is a function of
physical wear and tear (i.e., usage), maintenance and repair efforts, and the quality of
the original brand purchased.
We also expect that the age of the currently owned unit will be an important indicator of product obsolescence. This obsolescence 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 expected (i.e., the probability of a replacement
purchase increases as the units age increases). 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 increasing hazards (1 < y < 2), linearly increasing hazards (y = 2), and convex increasing
hazards (y > 2). Based on empirically fitted

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 measures, previous studies indicate that the general variables of stage in the family life
cycle and need for convenience are important 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 nonlinear relationship (i.e., U-shaped) to purchase
probability. His results suggest that replacement demand is associated with older households. 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 present in the household). Contrary to Strober
and Weinberg (19771, Weinberg and Winer
(19831, and Winer (1985b), Kim (1989) finds
that wifes employment is significantly related to durable ownership, even after controlling for income and life cycle effects.
Finally, there is general agreement that a
recent move is associated with durable purchases (e.g., Winer, 1985b; Wilkie and Dickson, 1985). Based on this literature, we hypothesize that older households, households
with working wives, and households that have
recently moved are more likely to have positive replacement
intentions for currently
owned durables.

B.L. Bayus, S. Gupta

/ Consumer

Generally speaking, household income is a

significant and positive variable in studies of
durable ownership (e.g., Nickels and Fox,
19831, durable expenditures (e.g., Strober and
Weinberg, 1977; Weinberg and Winer, 1983;
Van Raaij and Gianotten, 1990), and probability of purchase (e.g., Winer, 1985b). In a
study of the multidimensional
measure of
consumer confidence (including current and
expected evaluations of the general economic situation, household finances, price
increases, and savings), Van Raaij and Gianotten (1990) conclude that income is the most
important determinant of consumer durable
spending. A factor called household financial situation (composed of perceived current and expected household finances) was
also significant, while another factor termed
development of the general economic situation (composed of perceived current and
expected general economic situation, price
increases, and unemployment) was not a significant explanatory
variable of durable
spending. Based on these and other related
studies, we hypothesize that the effects of
household
income and expected
future
household financial situation on replacement
intentions are positive.
3.3 Summary
Based on the previous discussion, the resultant set of eight explanatory variables and
their hypothesized direction of influence on
durable replacement
intentions is summarized in Table 1.

4. The empirical study

4.1 Data
An empirical analysis of durable replacements requires that consumers have experience with (e.g., currently own) the products
being considered. Due to their relatively long

durable replacement

Table 1
Explanatory

261

intentions

variables

and hypotheses

Variable

Definition

Hypothesized
direction
of influence

CONDITION

reported condition of
unit currently owned

negative

HAZARD

calculated
hazard rate
of unit currently owned

positive

SPOUSE

whether or not household

has a working wife

positive

HHAGE

reported age of
household head

negative

HHAGE

squared age of
household head

positive

MOVED

whether or not household

has recently moved

positive

INCOME

reported gross annual

household income

positive

EXP_
FINANCES

expected future
household financial
situation

positive

lifetimes, consumer durables also tend to be

purchased
infrequently.
These inherent
product and decision characteristics imply
that relatively large samples are needed to
investigate the replacement process (see also
Cox et al., 1983).
Unfortunately,
publicly available panel
data sets (e.g., Surveys of Consumer Finances,
University of Illinois Survey Research Center) do not collect data on key aspects associated with the replacement decision (e.g., age
and condition of currently owned units).
However, an opportunity to collect cross sectional information on the variables in Table
1 was provided by the Arkansas Household
Research Panel, organized and maintained
by the University of Arkansas in the US.
Households were mailed a four-page questionnaire in January 1990 concerning their
ownership and twelve month purchase intentions (four-point scale) for several home appliances: stove, refrigerator, washer, color
television, video cassette recorder, vacuum

262

B.L. Bayus, S. Gupta / Consumer durable replacement intentions

Table 2
Sample profile

Mean age HH head

> High school education
Gross annual income
< $35K
$35K-$6SK
> $65K
Married
Spouse employed
Sample size

Respondents

Nonrespondents

56 years
59%

53 years
57%

64%
31%
5%
76%
30%
407

62%
31%
7%
80%
40%
154

Total

55 years
58%
64%
31%
5%
77%
33%
561

cleaner, and coffee maker. This set of appliances was selected to represent a range of
product categories. Prior research (Pickering
et al., 1973; Bayus and Carlstrom, 1990) indicates that these appliances can be separated
into three groups based on perceptual measures: major home appliances (stove, refrigerator, washer, vacuum cleaner), housewares (coffee maker), and entertainment
items (color TV, VCR).
Information on the age (in years) and condition (three-point scale: good, fair, poor) of
currently owned units was also collected. Demographic data such as age of household
head (in years), income (eleven-point
ordered scale), and whether a spouse was employed (if married) were also available. Finally, 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 generally 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 respondents is a little older and has a smaller
percentage of households with a working
spouse than the nonrespondents.
No statistically significant differences exist in terms of
household income, education of the household head, and the percentage of married
households.
Most of the variables in Table 1 have
natural definitions based on the survey quesintentions
were ditions. Replacement
chotomized into positive (1 = definitely or
likely) and negative (0 = not likely or definitely not) intentions by combining response
categories. 3 Since unit condition was reported 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 condition is poor, 0 otherwise). Similarly, expected
future household financial situation is represented by two dummy variables (BETTER =

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 fiveto much worse than now) to
financial situation. In their analyto have equal interval properties.
such a scale has not been estabordered scale, but only assume

Since replacement
intentions
were collected
using a fourpoint scale, estimation
procedures
such as multinomial
logit
or probit, or ordered
logit could also be used. However,
other analyses (using an ordered logit model) not reported
in this paper indicate
that the main conclusions
remain
unchanged.
Thus, for ease of interpretation
we report results based on a binary dependent
variable.

B.L. Bayus, S. Gupta

/ Consumer durable replacement

1 if expected financial situation is better than

now, 0 otherwise; WORSE = 1 if expected
financial situation is worse than now, 0 otherwise). Relating these dummy variables to
Table 1, POOR and BETTER are hypothesized to have positive coefficient signs, and
GOOD and WORSE are hypothesized to be
negatively related to replacement intentions
and purchase. MOVED is defined as 1 if the
household has lived at the present address
for less than one year, 0 otherwise. The
HAZARD rate for product i is calculated as
28,tij, where tij is the age of product i for
household j and the parameter Bi is found
using the overall mean replacement age of
product i (CL= i(rr/0)/).
Estimates of
mean product replacement ages are available
in trade publications and are given in Table
3.
4.2 Analysis method
In order to estimate the replacement intention model, we pooled the data for the
407 respondent households across the seven
products. Aftering deleting observations with
missing values, the total sample size available
for analysis is 2132. Supporting this decision
are two factors: (1) due to the nature of
consumer durables and the replacement decision, a relatively small number of households indicated a positive replacement intenTable 3
Product characteristics

for home appliances

age (years)

Mean unit age (years)

Positive replacement
Negative replacement

intentions
intentions

Positire replacement intentions (%)

Unit in good condition
Unit in poor condition
Sample

size

a From Appliance,
Of all households

tion for each of the eight products considered individually; and (2) the product characteristics summarized in Table 3 suggest that
the expected relationship between unit age,
unit condition, and intentions are similar for
each separate product. Although the model
developed in Section 3 does not consider
differing effects by product category, we allow for intrinsic product specific effects in
the logistic regression model (i.e., product
specific constants; see Chintagunta, 1992) by
defining six appropriate
dummy variables:
STOKE (1 if stove, 0 otherwise), FRlDGE (1
if refrigerator, 0 otherwise), WASHER (1 if
clothes washer, 0 otherwise), CW (1 if color
TV, 0 otherwise), VCR (1 if VCR, 0 otherwise), and VACUUM (1 if vacuum cleaner, 0
otherwise). Here, coffee maker is assumed to
be the base product (i.e., if all product
dummy variables equal zero). Everything else
being equal, if a particular appliance has
some inherent replacement
importance or
priority in the household, then we expect
the dummy variable for that product to be
statistically significant.
5. Resdts
5.1 Model fit

The overall fit of the logistic regression

model is very good. Classification results for

studied

Stove

Mean replacement

263

intentions

Refrigerator

Washer

Color
TV

VCR

Vacuum
cleaner

Coffee
maker

15

13

12

11

15.8
11.0

14.5
9.0

11.5
8.0

9.6
5.7

4.5
2.9

11.2
7.2

4.8
3.8

4b
64

2
30

3
100

5
80

3
100

4
77

0
100

360

368

373

259

366

35

371

September
1984.
owning a stove in good condition.

4% had positive

replacement

intentions.

264

B.L. Bayus, S. Gupta

/ Consumer

this model are in Table 4. The percentage of

correctly classified cases is (111 + X308)/
2132 = 90.0%. This is better than a random
proportional chance model, which yields a
hit rate of p* + (1 -p)* where p is the
prior probability of positive intentions. Estimating p = 0.131 based on the observed proportion of positive intentions, classification
accuracy for a random model is 77.2%. Although not shown, correct predictions for
individual products were over 85% in all
cases. Due to the relatively small sample
percentage of positive intentions (280/2132
= 13.1%), it is not surprising that the logistic
regression model predicts negative replacement intentions better than positive intentions (98% correct for negative intentions as
opposed to 40% correct for positive intentions). This may also indicate that the model
does not capture all of the important factors
underlying the replacement decision. We discuss this point in a later section.

durable replacement

Table 5
Estimation

infentions

results
Coefficient

*-statistic

5.88
7.78
8.44
7.81
7.90
8.08
8.07

0.07
0.12
0.14
0.12
0.12
0.13
0.13

CY

STOVE
FRIDGE
WASHER
CTV
VCR
VACUUM
CONDITION

GOOD
POOR
HAZARD
SPOUSE
HHAGE
HhYGE
=
MOVED
INCOME
EXP_ FINANCES
BETTER
WORSE
Model chi-square
(d.f.)

- 2.64
1.68
3.71
0.52
0.00
0.00
0.30
0.02

569.04 *

13.35 *
5.94 *
0.00
0.15
1.33
0.20

a
0.56
-0.31
609.04 *
(16)

12.73 *

a Chi-square
statistic calculated
as the difference in model chi
square with and without the two dummy variables
representing this variable (e.g., see Hosmer and Lemeshow, 1989).
* Significant at 0.01 level.

5.2 Estimation results

The estimated coefficients for the logistic
model are reported in Table 5. The model
chi-square is highly significant. The coefficients of the four significant variables are in
the hypothesized
direction. The product
characteristics of perceived unit condition
and hazard rate are significant, and show
negative and positive effects, respectively.
Whether a spouse is working and expected
future household financial situation are positive and significant. None of the product

Table 4
Overall model

fit

Actual
replacement
intentions

Predicted replacement intentions

Total

Positive

Negative

Positive
Negative

111
44

169
1808

280
1852

Total

155

1977

2132

dummy variables are significant, indicating

no intrinsic product specific effects.
Consistent with Kim (19891, we find that
wifes employment status is an important
variable related to replacement intentions.
Supporting the results of Van Raaij and Gianotten (19901, we find that expected household financial situation is significantly associated with replacement intentions. Contrary
to the results of Strober and Weinberg (19771,
Weinberg and Winer (19831, and Winer
(1985b) for durable ownership and probability of acquisition, we find no significant effects for age of household head on replacement intentions. Unlike other studies which
find that income is a significant variable for
durable ownership (Nickels and Fox, 19831,
durable expenditures
(Strober and Weinberg, 1977; Weinberg and Winer, 1983; Van
Raaij and Gianotten, 19901, and purchase
probability (Winer, 1985b), our results do not

B.L. Bayus, S. Gupta / Consumer durable replacement intentions

265

show a significant income effect for replacement 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.

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 product condition and the hazard rate (which is a
function of the currently owned units age)
on subsequent replacement intentions.

5.3 Elasticities

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.

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 variables can be calculated by determining the
percentage change in the probability of positive replacement intentions for a one unit
change in an explanatory variable. Evaluating the change in intentions for each household and averaging across households, the
resulting elasticity estimates are in Table 6.
Considering the product characteristics,
a
one year increase in the age of each product
owned increases the probability of positive
replacement intentions by 2.91% and a worsening of the products condition increases
the probability of positive replacement intentions 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

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)

replacement

intentions

Elasticity

2.91
471.89
18.95
22.70

6. Discussion

and conclusions

6.1 Study limitations

Before implications of the results are discussed, it is important to note some limitations of the study. As always, a general limitation is the use of a specific sample and
single time period (i.e., a sample of Arkansas
households in early 19901, which makes it
difficult to generalize the findings to other
samples or consumers that purchase appliances 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 independently of similar replacement decisions
faced by a household and/or first purchase
decisions for other durable products (or expenditure alternatives such as vacations, college tuition, etc.). Other research (e.g., Urban and Hauser, 1986) indicates that households do have budget constraints and thus
make decisions between alternatives. Our use
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. Individual household data, perhaps collected in an
experimental fashion, is needed to study this
issue in greater detail. Studying replacements as a choice among heterogeneous alternatives is also a potential area for future
research (e.g., see Bayus and Rao, 1989).
Although our survey questions were designed to be valid measures of the underlying
constructs in Table 1, due to the nature of
the study (i.e., cross sectional and self-reported) it is possible that the causal direction 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 refrigerator or a coffee maker in poor condition
specified the reason for making a replacement purchase as old unit broken, expected old unit to breakdown, or costly
repairs needed. This indicates that the measure 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 intentions.
6.2 Implications
Researchers have suggested that the reason 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 (information which is not generally collected) is a

significant explanatory variable of replacement 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 provide improved predictive power. Future research might address this question.
Other analyses not reported in this paper
give an initial start in this direction. As discussed earlier, unit condition is a function of
physical wear and tear, and maintenance and
repair efforts. For six appliances (refrigerator, stove, washer, VCR, color TV, vacuum),
unit age (a proxy for physical deterioration)
is positively and significantly related to reported unit condition, and for four of these
(refrigerator, stove, washer, vacuum> household 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 importance 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 underlying age distribution is a promising area for
further research.
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