Relation between Credit card usage and Materialism

Materialism & Credit Card Usage

(Consumer Behavior)

Group - 3

IIM Rohtak

Research Objectives:

To study influence of material characteristics on credit card usage by analyzing :

Behavior of credit card buyers

Relation between materialism and purchase/usage of credit card

Materialistic Factors which influence purchase decision

Factors to improve involvement with product

Personality( Trait Theory )

Motivation

Self Concept

Perception

Dimensions Explored

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Money at Disposal

Materialism

Possession

Social Status

Credit Card Ownership IIM Rohtak Research

Research Findings

By Virtue of our Research and subsequent factor analysis the following key factors related to

Materialism and Credit Cards emerged :

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Research Findings-1

Significant Correlation Between

Materialism and Usage (+)

Materialistic people generally involve in higher credit card usage.

“The more materialistic individuals are, the more finance charges are on those credit cards, and the more likely they are to have loans of more than than $1,000 (Watson, 2003)”

Status and Usage (+)

More credit card usage signifies a higher status in society

“active users of credit cards are affected by key variables related to consumers’ perceptions of social status and acceptability (Medina and Chau, 1998, pp. 429-448)”

Status and Credit Card Ownership Status (+)

Owning a credit card signifies higher status in the society

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Research Findings-2

No Significant Correlation Between

Money and credit card usage

Money and owning a credit card

Non-materialism and owning a credit card

Possessions and credit card usage

Possessions and owning a credit card

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Status & Credit Card Use

o  Social Self Concept: The students of premier B-schools want to project themselves as high status

o  Maslow’s Needs Hierarchy; Self Esteem: Motives oriented towards having a high status

o  Selective Interpretation: The students of premier B-schools, based on their interpretation, classify Credit Card Use as a stereotype for showing high status

Consumer Behaviour Implications

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Materialism & Credit Card Use:

o   Based on VALS segmentation; Strivers: Majority of students in a premier Bschool can be classified as Strivers. For Strivers, Money defines success but they don’t have enough of it to buy things to fulfill their materialistic needs. Thus they use Credit Card to fulfill their needs.

o   Sheth’s Consumer Motives; Functional: Since there is high materialism, there is always a want for new things. Credit Card serves as fast cash and is really helpful in impulse buying. Hence materialistic needs can be fulfilled by credit card usage.

Status and Credit Card Ownership:

o   Cause and Effect relationship: Need for a high social status (cause) increase the desire to have the credit card (effect). It increases the involvement towards the credit card. People with higher need for social status would look for credit card with high credit limit.

o   Recognition with Upper Middle and Upper-Upper Social Class: Owing a credit card make the people recognize themselves with those belonging to upper-middle class and upper-upper class.

Consumer Behaviour Implications

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  Suggestions

Success for Credit Card Companies !

Aspirants of Social status

Target Materialistic

People

Target Frequent

Flyers

We would suggest the following to Credit Card Companies

Target materialistic people

Offer credit cards to regular shoppers or those who buy above a certain limit in a month

Shoppers Stop offers First Citizen Citibank Titanium Credit Card

Offer credit cards to frequent flyers

Yatra.com offers Barclays Yatra Card and Standard Chartered Yatra Platinum cards

Earn Airpoints Dollars

Target customers who have high social status or aspire for higher social status to spend more using their credit card

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  SuggestionsTarget status aspirants linking them to status by owning a credit card

For eg : American Express Platinum Card

Travel benefits- access to airport lounges throughout the world

Attend “Card Member Only” Fashion Show

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Conclusion / Limitation

Conclusion:

There is ample scope for Credit Card companies to target premier B-School students.

Although there is a perceived belief that Money and Possessions are highly related to Credit Card usage, but our study establishes that they are of less significance.

Limitations:

Study is done on IIM students , which limits the result to be applied to other students.

Although Secondary Research indicates that Risk (Credit Card Misuse) is associated with usage but our study did not identify a parameter connected with risk; probably b,coz of inadequacy of sample.

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THANK YOU

Group:3

ChalisRenjuRohitSahilShamli Vikram