Curtin Business School School of Marketing Tendency towards the Fear of Missing Out Zi Cheng Wesley Lim This thesis is presented for the Degree of Doctor of Philosophy of Curtin University November 2016 STATEMENT OF ORIGINAL AUTHORSHIP Declaration To the best of my knowledge and belief, this thesis contains no material previously published by any other person except where due acknowledgment has been made. This thesis contains no material which has been accepted for the award of any other degree or diploma in any university. The research presented and reported in this thesis was conducted in accordance with the National Health and Medical Research Council National Statement on Ethical Conduct in Human Research (2007) – updated March 2014. The proposed research study received human research ethics approval from the Curtin University Human Research Ethics Committee (EC00262), Approval Number # SOM2014075 Signature: …………………………………………. Date: 21 November 2016 ii ACKNOWLEDGEMENTS First and foremost, I would like to thank God for His grace, strength, and wisdom that helped me through the countless challenges I experienced over the duration of my PhD. I would like to express my sincere gratitude to my supervisors Professor Ian Phau, Dr Isaac Cheah and Dr Min Teah. Their unwavering support, guidance and constant encouragement throughout my PhD journey has made the completion of this thesis possible. Professor Ian Phau, for imparting his incredible knowledge, experience and being an exceptional mentor; Dr Isaac Cheah for always making himself available to help resolve issues that I had, no matter how trivial they were; and Dr Min Teah, for creative insights and ideas that made this thesis more enriching and meaningful. My family, especially my parents, Kwang Keat Lim and Khar Keow Lim, and my sister Cherlyn Lim for being a constant source of strength and encouragement through this process of writing my thesis. To Sarah Kee, thank you for being my intellectual, emotional, and spiritual support throughout this journey. To my fellow colleagues and friends at Curtin University, I am grateful for your knowledge, insights, encouragements and support over the course of these few years. Sean Lee, Aaron Lim, Michael Lwin, Billy Sung, Elaine Sutrisna and Anwar Sadat Shimul, I am grateful for your valuable inputs and emotional support throughout this journey. To my church family from Joy City Church, especially Pastor Kar Meng Chan and Pastor Maggie Chan, thank you for your prayers and encouragement over these years. Last but not least, to all those whom I may have missed out, but have helped me with the completion of this thesis one way or another, I would like to express my heartfelt appreciation. iii ABSTRACT The purpose of this research is to extend the current body of literature pertaining to the ‘Fear of Missing Out’ (FOMO) within a luxury branding context. Specifically, the research aims to investigate the effects of FOMO on consumer behaviour. The study adopted a rigorous theory building process to conceptualise FOMO as a general personality trait that varied across different individuals, and demonstrated how this trait influenced consumption behaviour. Subsequently, this led to the development and validation of a uni-dimensional ‘Tendency towards the Fear of Missing Out’ (T-FOMO) scale, which built on the existing FOMO scale (Przybylski et al. 2013). The T-FOMO scale which is more relevant and suitable for use in a marketing context. A theoretically-driven research model was developed to empirically test the impact of T- FOMO on two different scarcity messages, namely, limited quantity scarcity and limited time scarcity. This was done across two product categories, namely, private and public goods. Moreover, the context of the study was restricted to limited edition aspirational luxury products. The research model consisted of T-FOMO and other related constructs such as desire for uniqueness, attitude toward the advertisement, purchase intention, consumer susceptibility towards interpersonal influence and inferences of manipulative intent. These constructs were incorporated into the research model to test the effects FOMO has on consumer behaviour. This research utilised a two by two factorial experimental design (type of scarcity message: limited quantity scarcity and limited time scarcity and type of product category: public and private). This resulted in six studies that were used to examine the effects of FOMO on consumer attitudes and purchase intentions. A total of 936 useable responses were collected for the study. For the scale development, the process involved a combination of statistical analysis techniques which were used to generate, purify and validate the scale items. The key ones employed were Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA). To investigate the hypothesised relationships for the main study, the key statistical techniques used were Structured Equation Modelling (SEM), Hierarchical Moderated regression (HRM) and Mediation Analysis (MA). The findings of the study found further evidence that the use of the ‘limited edition’ label is an effective marketing communication strategy. More importantly, the findings identified that the use of explicitly expressed scarcity messages in the advertisement were found to be effective iv in enhancing the perceived value of the advertised limited edition product. Furthermore, this finding also proved that the use of scarcity cues was effective in generating favourable attitudes and purchase intentions towards the advertised product for FOMO consumers across the majority of the studies. Additionally, the findings of the study revealed that individuals with the FOMO trait responded differently, depending on the type of scarcity message and product type. Finally, these findings provide some key theoretical, methodological and managerial contributions. Firstly, these contributions are pertinent for researchers who want to further investigate the effects of FOMO in other marketing contexts. Secondly, these insights will be useful for brand managers when formulating their communications strategies to appeal to the FOMO consumer. Thirdly, the findings also provide strategies for product development and launches. Key words: Fear of Missing Out, Scarcity Messages, Aspirational Luxury Brands, Public and Private Goods, Scale Development, Attitudes, Purchase Intentions v CONTENTS PAGE 1 INTRODUCTION............................................................................................................ 1 1.1 HUMAN EVOLUTION AND FOMO ...................................................................... 1 1.2 BACKGROUND OF FOMO..................................................................................... 3 1.3 LEVERAGING FOMO ............................................................................................. 4 1.4 EFFECTS OF SCARCITY ON FOMO..................................................................... 8 1.5 OBJECTIVES OF THE STUDY ............................................................................. 10 1.6 DELIMITATIONS AND SCOPE ........................................................................... 11 1.7 DEFINITION OF KEY CONSTRUCTS AND THEORIES................................... 12 1.7.1 Definition of Key Constructs ............................................................................... 12 1.7.2 Key Theories ........................................................................................................ 12 1.7.3 Secondary Theories.............................................................................................. 13 1.8 METHODOLOGY................................................................................................... 14 1.9 SIGNIFICANCE OF STUDY ................................................................................. 15 1.9.1 Theoretical and Conceptual Significance ............................................................ 15 1.9.2 Methodological Significance ............................................................................... 16 1.9.3 Managerial Significance ...................................................................................... 16 1.10 CHAPTER SUMMARY.......................................................................................... 17 2 LITERATURE REVIEW ............................................................................................. 19 2.1 OVERVIEW ............................................................................................................ 19 2.2 BACKGROUND ON SCARCITY .......................................................................... 20 2.3 TYPES OF SCARCITY MESSAGES..................................................................... 21 2.3.1 Limited-Supply Scarcity ...................................................................................... 21 2.3.2 Limited-Time Scarcity ......................................................................................... 25 2.4 FEAR OF MISSING OUT....................................................................................... 26 2.5 CONCEPTUALIZING FOMO................................................................................ 28 2.5.1 Personality Traits and Consumer Traits............................................................... 28 2.5.2 Loss Aversion ...................................................................................................... 33 2.6 EMOTIONAL CORRELATES OF FOMO ...........................................................