2006 ams annual conference, may 24-27, san antonio, texas factors influencing students’ selection...

2006 AMS Annual Conference, May 24-27, San Antonio, Texas

Factors Influencing Students’ Selection of Credit Cards: Some Initial Results

Charles Blankson

University of North Texas, Denton, Texas

Sylvia J. Long-Tolbert

University of Toledo, Toledo, Ohio


Presentation

• Rationale for the study

• Research aim

• Methodology: 5 steps in scale development

• Results and Discussion

• Managerial contributions


American students


Rationale for the study

• Importance of consumers’ selection/choice criteria in the changing competitive financial services (banking) sector (Lewis, 1982; Thwaites and Verre, 1995; Devlin, 2002).


Rationale for the study contd.

• Difficulties in attracting and maintaining college students and the youth population (Lewis, 1982a).

• Bank advertising and promotions have little effect upon college students’ choice criteria (Lewis, 1982b).



• Some 82% of US college students own at least one credit card (Roberts and Jones, 2001).

• The subject of the criteria/factors used by college students in selecting credits card brands is important in the banking services sector.



• “…it is of little use for an organization to attempt to position and differentiate an offering by emphasizing particular attribute(s) that do not constitute significant choice/selection criteria in the target market…” (Devlin, 2002, pp.276).


Research Aim

• To develop a scale that measures college students’ decision criteria (selection) when evaluating and/or choosing a credit card brand.

• Note: This study does not deal with the debate about (a) students’ credit card debt and (b) credit card companies’ ethical behavior on college campuses.


Research Objectives

• To generate a pool of items or statements which college students employ in their evaluation and/or selection of credit card brands and

• To synthesize and then reduce these statements/items into key determining factors explaining or underpinning college students’ selection of credit card brands.


Methodology: Initial generation of statements (step 1)

• Pre-notification announcements in class rooms.

• Focus group sessions:– Involving a convenience sample of 70 undergraduate and

graduate business students (4 batches of 15 undergrads and one batch of 10 evening MBA students at GVSU)

– vocabulary about the descriptions of their evaluation criteria and rationale for their selection of their credit card brands.

• Qualitative analysis was conducted via the inductive reasoning approach (Brady and Cronin, 2001):– 80 statements/items were identified.


Deletion of duplicate statements (step 2)

• Examination of the 80 statements was via the inductive reasoning – resulted in the retention of 43 statements/items.


Initial collection of perceptions (step 3)

• The 43 items formed the questionnaire and was pre-tested among a convenience sample of 40 undergrad and 14 MBA students from GVSU (Parasuraman, Zeithaml, Berry, 1988).

• Finally, a self-administered survey was carried out in class rooms using a convenience sample of 600 students from GVSU, Cornerstone university and Drexel university.


Initial collection of perceptions (step 3 contd.)

• The 43 statements (questionnaire) were measured on a 7 – point Likert scale (1 = not important at all and 7 = very important).

• Out of the 600 questionnaires distributed in class rooms, a total of 338 were received, yielding a 56% response rate.


Scale development (step 4)

• The underlying structure of the data was explored via EFA (DeVellis, 1991; Churchill, 1997; Fabrigar et al., 1999).

• Considerable degree of inter-factor correlation.

• The Bartlett test of Sphericity (Approx. Chi-square = 18063.571; df = 1275; sig. 0.000) and

• KMO measure of Sampling Adequacy Index (0.917) confirmed the appropriateness of the data for EFA.


Scale development (step 4 contd.)

• Principal component analysis was employed to reduce the number of factors using the 50% cut-off criteria.

• 9 factors were extracted and accounted for 61% of the variance.

• Examination of the communality column further showed evidence of the overall significance of the solution extracted.


Scale development (step 4 contd.)

• The oblique (Oblimin) rotation was applied to the data.

• The factor loading for the common factors was subjected to the 0.5 absolute value (Hair et al., 1998).

• Internal reliability was assessed via the Cronbach Alpha ά.

• All factors exceeded the adopted criteria.


Identification of the main factors (step 5)

• Following:– Examination of the EFA results,– Analysis of the internal reliability,– Conceptual coherency of the indicated

factors….

Four factors emerged and were named (Parasuraman, Zeithaml, Berry, 1988; Spector, 1992).


Internal consistency of revised structure

• Factor 1 (Buying power)– Good when traveling

– For shopping

– To order from catalogs

– Easier than writing checks

– Gives extra buying power

ά Value = 0.8467

• Factor 2 (Incentives)– Cash back bonuses

– Cash back at the end of th year

– Gain points for using card

– Pays you to use it

– Receive discounts on purchases

ά Value = 0.8570


Internal consistency of revised structure

contd.

• Factor 3 (Firm’s Reputation)– Friendly staff

– Competence

– Good customer service

– Good service provision

– Reputation of the organization

– Quick service Consistency

ά Value = 0.8603

• Factor 4 (Enhance good credit)– To establish good credit

– To obtain credit

– ά Value = 0.7574


Results and Discussion

• This study has attempted the development of a scale measuring factors influencing students’ selection of credit cards.

• Buying power = confidence in purchases that the usage of the card and/or affiliation with the card organization brings to the consumer.


Discussion contd.

• Incentives = issues about enticement and “perks” used by organizations to woo or attract customers to obtain and use a card.

• Firms’ reputation = a card organization’s reputation regarding good service provision, consistency, competence and friendly staff.


Discussion contd.

• Enhance good credit = the benefits of establishing credit history from the usage of the card.


Managerial contributions

• The results could be useful for managers and advertising executives involved with students’/youth credit card accounts.

• Employ the four factors to reflect marketing strategies or tactics (e.g., services marketing mix, relationship marketing):– To change consumers’ attitudes about a card brand,– To change the card brand’s image and – Pursue these strategies in proactive manner to pre-

empt the competition.


Managerial contributions contd.

• While “financial security” and “enhance good credit” may be pursued by all card organizations,

• we infer that “incentives” and “firm’s reputation” are crucial factors/strategies capable of differentiating and/or positioning a card brand.


Thank you

2006 ams annual conference, may 24-27, san antonio, texas factors influencing students’ selection...

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