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Surfboard rental shop by Visitor7
November 16, 2018

Why renting can be better than owning

Purchasing a skill-based product can be self-defeating

Author: Holly Ober
November 16, 2018

Thinking about buying a surfboard or electric guitar? If you’re a beginner maybe it’s better to rent than buy at first says a new study.

People who buy a skill-based product tend to overestimate the amount of time it will take to master the product’s use leading to procrastination and failure to master or even use it at all. People who rent the same product, on the other hand, estimate they can master the skill in a shorter amount of time and are more likely to use the product. People who buy skill-based products are, therefore, more likely to give up than people who rent and are less engaged with the product and company they bought the product from.

People usually estimate how much effort it will take to learn the skills required to use products based on reliable information, such as how long it took in the past. But when they are novices, they often look to reference groups with broad similarities to themselves.

Based on his doctoral dissertation work, R. Dustin Harding at Utah Valley University, along with Thomas Kramer, a professor of marketing at the University of California, Riverside’s School of Business, Diogo Hildebrand, at City University of New York, and Jannine D. Lasaleta at Yeshiva University, hypothesized that novices who buy a product compare themselves to other owners, while novice renters compare themselves to other renters.

In a series of experiments, volunteers were given a computer game or a toy similar to a Rubik’s Cube to own or given the same object for a limited period of time. The volunteers answered questions about how long they thought it would take to learn the skill and who they thought was already good at using it.

People who owned the toy or game compared themselves to other owners, who they thought had had time to practice and perfect the skills associated with the product. People who thought they were renting compared themselves other renters and thought other renters had had little time available to learn to use the product. Both groups thought renters would be less skilled than owners because owners had unlimited time to practice.

Because new renters compared their abilities to the abilities of unskilled individuals and new owners compared their abilities to the abilities of highly skilled individuals, new renters felt more confident and believed the products would be easier to master. New renters, therefore, did not give up as easily as new owners at learning to use the products.

Analysis of transaction records from a music store in Utah complemented the experimental findings. People who purchased musical instruments made fewer return visits to the store, bought fewer accessories, and were less likely to upgrade the instrument following the initial acquisition. In other words, purchasers were less engaged with the product and the company they purchased it from.

The study is the first to complicate a phenomenon marketers call the endowment effect: Financial investment in a product makes people more determined to keep and use the product. But an estimated long learning curve could mean the product will sit in its original box in the back of a closet for a very long time.

Although consumers persistently believe that buying a skill-based product will improve a novice’s performance, if they compare themselves to a highly skilled reference group they are likely to feel a decrease in their own relative ability and less optimistic about their future performance. Hence, purchasing a skill-based product can be self-defeating.

“When consumers begin their journey of skill-based product mastery, they may benefit from nonpurchase forms of product usage to increase their perceived utility, satisfaction, and self-efficacy toward product usage, thereby increasing the amount of time they end up using the product and perhaps the likelihood that they will actually master it,” say Harding and Kramer.

The paper, “The Impact of Acquisition Mode on Expected Speed of Product Mastery and Subsequent Consumer Behavior,” is published in the Journal of Consumer Research. (DOI: 10.1093/jcr/ucy063)

(photo credit: Visitor7 on Wikimedia Commons)

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