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Trends in e-Services, Beliefs about Service Technologies, and Issues

Researching the Category:The National Technology Readiness

Survey — 1999 - 2007

Charles L. Colby, PresidentGina Woodall, Vice PresidentRockbridge Associates, Inc.

For info, contact: Charles Colby703-757-5213 – [email protected]


Discussion Points Today

NTRS Research ProgramOverview of Consumer Techno-ReadinessTR Segmentation (“Typology” Based on Latent Class Analysis)Trends in e-ServicesIssues in Research e-Services


Our Research Program

National Technology Readiness Survey– Authored by Parasuraman and Rockbridge– Sponsored by the Center for Excellence in

Service, R.H. Smith School of Business, University of Maryland

– Replicated in 1999, 2000, 2001, 2002, 2004, 2005/6; 2007 in field now

– Nationally representative telephone survey through 2004

– Hybrid Web/Phone Survey starting in 2005/6

Other efforts in dozens of countries


“Technology Readiness Index (TRI), a Multi-Item Scale to Measure Readiness to Embrace New Technologies,” A. Parasuraman, Journal of Service Research, Vol. 2, No. 4, 307-320 (2000)

Techno-Ready Marketing: How and Why Your Customers Adopt Technology (Parasuraman & Colby: Free Press, April 2001)

www.technoreadymarketing.com

Sources


8 years of Research8 years of Research

What are we learning about What are we learning about the consumer behavior of the consumer behavior of

technology adoption?technology adoption?


What is Technology Readiness? (TR)

TR refers to people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work

TR reflects an overall state-of-mind; it is not a measure of competence

It describes the person, not the technology


LO TR

HITR

• Technology not for ordinary people• Distrust tech support• Want the basic model• Technology fails at worst time• E-commerce not safe• Need confirmation that technology works• Prefer talking to a person

• Technology gives control• Technology more convenient• Want most advanced technology• Computers expand hours of business• Want to tailor technology• Thought leader• First to acquire new technology• Keep up with developments• Like high-tech gadgets

100

92 107

Technology Readiness Distribution


Discomfort InsecurityInhibitors

Contributors InnovativenessOptimism

Technology Readiness

Drivers of Technology Readiness


• Optimism: Positive view of technology; belief that it offers increased control, flexibility and efficiency

• Innovativeness: Tendency to be a technology pioneer and thought leader

• Discomfort: Perceived lack of control over technology and a feeling of being overwhelmed by it

• Insecurity: Distrust of technology and skepticism about it working properly

TR Dimensions


The Technology Readiness Index (TRI):

A Multi-Item Measure

36 agreement scaled attributes4 sub-scales for measuring individual dimensions of TRMany studies use an abbreviated 10 item or 6 item indexThe scale is available to scholars without chargeNote: scale is called TechQual® in a commercial setting


Technology Readiness Index:Distribution (Actual Data, 2005/6)

Kurtosis = -.164Skew = -.231


The TRI is Highly Stable over Time

104.6100.699.5101.8100.3100

0

20

40

60

80

100

1999 2000 2001 2002 2004 2005/6

Techno-Readiness was highly stable from 1999 to 2004TR does not change readily on an individual basis


Why did TR Increase in 2005/6?

There is a high degree of stability over time – TR items appear to be firm beliefs rather than prevailing opinions that shift in response to market change– Over time, consumers have gained greater

confidence in online services and the internet, which make up some of the items in the index

– In 2005, it was necessary to switch to a combination web/phone methodology (discussed later), which had some impact


Conclusions

The TRI continues to be a strong predictor and explanatory variable in tech adoption– Example: a recent study of 9 countries (U.S.,

Canada, China, India, Japan, Russia, Turkey, Brazil, Mexico)

In the future, we need to focus on more “tech neutral” questions, of which there are many in the scale


A Technology Segmentation

Using a Typology to Describe Technology Consumer Behavior


TR Segments

In Techno-Ready Marketing, Parasuraman & Colby identified 5 technology segments

19

26

22

1518

0

5

10

15

20

25

30

Explorers Pioneers Skeptics Paranoids Laggards


Advantages of a Segmentation View (or Typology)

Recognizes that beliefs about technology do not follow a continuum– Example: “Pioneers” have a “love/ hate”

relationship with technologyA typology allows a differentiated marketing view:– Explorers: enlist help to identify innovations– Pioneers: provide hand-holding– Skeptics: convince them of benefits– Paranoids: reassure about safety– Laggards: sell them “last generation”

technology


Segmentation Approach

The typology used in Techno-Ready Marketing was based on K-Means, a robust and easy to use clustering methodResearchers have since relied on methods with greater stability and theoretical underpinning, including Latent Class (LCA) and Q-FactoringWe recently validated the segments using LCA on a data set including multiple years of NTRS data*– Result: a 64% overlap between K-Means and LCA

segments– Qualitatively, a similar typology emerged

*This was done in support of a TR-related research project by Ann Massey and Mitzi Montoya-Weiss, Indiana University.


LCA Segments (including deviation from means on 4 components)

Segment (original name per k-means)

%* TR In-dex**

Drivers (Positive) Inhibitors (Negative)

Opti-mism

Innov-ativeness

Dis-comfort

In-security

Skeptics 35% 107 -.07 -.15 -.28 -.35

Paranoids 20% 87 -.34 -.63 .59 .59

Explorers 18% 128 .64 1.11 -.68 -.72

Pioneers 17% 106 .54 .56 .35 .56

Laggards 10% 76 -1.33 -1.40 .48 .45

*Unweighted data. **100 = Average per 1999 baseline.


NTRS: 1999 – 2006

What are we learning about the e-Service marketplace?


83757072

56 62

76

36

5058 62 66

424341434144

0

20

40

60

80

100

1999 2000 2001 2002 2004 2006

Home Computers

Home Internet

Work Internet

NTRS shows consistent growth in Internet access at home, while exposure at work has not changed over 7 years

83% of consumers have access to the Internet somewhere (33% access it outside of work or home)

NTRS also tracks home networks, broadband, and internet identity

Connectivity Trends in the U.S.


E-Commerce is Growing

Online Activities (12 month period, based on population with home or work internet

access)

47

2531

21

50

344138

64

4350

20

4747

73

44

0

20

40

60

80

Bought Items <$10

Items between$10 and $100

Items > $100 Booked Travel

2000

2002

2004

2006

Consumers are moving forward cautiously in buying online, so e-commerce is now commonplace


There is continued growth in online banking Online billpaying is another rapidly growing area Consumers are moving beyond their banks, going

directly to billers sites

e-Finance is a Booming Category

Online Activities (12 month period, based on population with home or work internet

access)

11 9

40

22 25

51

27 27 30 31

48

26

494943

65

0

20

40

60

80

CheckedBank Acct.

Moved Funds CheckedUtility Online

Used OnlineBillpayService

Paid Bill atCompanyWebsite

2000

2002

2004

2006


C2C Commerce

The internet creates a growing market for consumers to deal directly, using online classifieds and auction sites

Online Activities (12 month period, based on population with home or work internet access)

30

12 91818

44

0

20

40

60

Bought from AnotherConsumer

Sold item Online Bought throughMultilevel Marketing

Channel

2004

2006


Expect a Revolution in e-Services


Factors Holding Back the e-Service Revolution in the U.S.

Promises for the Future– Fully mobile

commerce– Location-free

entertainment– Voice/data

convergence in service transactions

– Personalized mini-brands

– Web-conferenced interactions

Issues in U.S.– Slow connectivity

(behind Asia and Europe)

– Slow introduction of 3G, 4G and Wimax

– Limited consumer awareness of new technologies*

– Lingering insecurity

*In the 2005/6 NTRS, only 18% were at least a “little familiar” with 3G


Issues in Researching e-Services

Changing Sampling Frames and their Impact


Why NTRS Changed Methodologies

In 2005/6, the NTRS was fielded using ½ telephone sample and ½ web sample– Telephone: Random Digit Dialing (once the

gold standard)– Web: utilized a web panel by Survey

Sampling Incorporated


Issues with Telephone Sampling

Researchers are not allowed to contact cell phones for interviewingThere has been an increasing number of “cell phone only” households due to…– Households never signing up for wireline service

(usually younger, more mobile)– Number portability legislation allowing migration of

wireline numbers to cell phones– Estimated to be 10.3% in early 2006

Phone surveys also face problems with voice mail and caller ID being used to screen interviewing


Issues with Web Sampling

There is no rigorous probability sampling method for email/web surveys– Lack of an exhaustive sampling frame– Researcher code of conduct (CASRO) prohibits

unsolicited survey invitations

Researchers must rely on consumer panels, which have a range of potential problems– While possible to balance for demographics…– Other biases cannot be controlled

Excludes the 1/6 of consumers who are not online– At this point, the % coverage of telephone and web

frames is about the same


Issues with Combining Data

Scale usage by Respondents – note that TR items are fully anchored to help with this issueDifferent technology beliefs and behaviors after controlling for demographics and accessComplex weighting steps needed to address differences in frames


Future Directions


Future Steps for NTRS

The 2007 NTRS is in the field nowThe focus will be on Greenovators™ (the intersection between Green awareness and technology)Possible areas to explore:– Should the TRI list be refined, e.g., culling

less stable measures?– Exploring TRI on a global scale (we now

have a 9 country study using 10 items)

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