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Xerox University Microfilms 300 North ZM b Road Ann Arbor, Michigan 40100 77-2512 STRAW, Steven White, 1930- AN ANALYSIS OF CONSUMER USAGE OF COMPUTER CONSOLES FOR CREDIT CARDS, AN EMPIRICAL EXPLORATION OF RETAIL CUSTOMER BEHAVIOR. The Ohio State University, Ph.D., 1976 Business Administration Xerox University Microfilms , Ann Arbor, Michigan 40106 (£) Copyright By Steven White Straw 1976 AN ANALYSIS OF CONSUMER USAGE OF COMPUTER CONSOLES FOR CREDIT CARDS, AN EMPIRICAL EXPLORATION OF RETAIL CUSTOMER BEHAVIOR DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Steven white Straw, B.S., M.A. The Ohio State University 1976 Reading Committee: Approved By Dr. Bernard J. LaLonde Dr. John R. Grabner Dr. James E. Robeson J i Je. f Adviser Department of Marketing and Logistics ACKNOWLEDGEMENTS Completion of a task of such magnitude as this dissertation would have been impossible without the assis­ tance and encouragement of many individuals too numerous to thank individually. A few people made major contri­ butions to the research effort and encouragement to the author during the many months consumed in doing the work. The author is particularly indebted to the following in­ dividuals and gratefully acknowledges their invaluable assistance and inspiration. Dr. Bernard J. LaLonde, "James R. Riley" Professor of Marketing and Logistics, The Ohio State University, who served as Chairman of the Dissertation Committee, gave unselfishly of his time and expertise on innumerable occasions. His guidance was felt in each and every phase of the research and the preparation of this dissertation. A skillful blend of help and criticism led the author to higher achievement and greater effort than would have been possible without Dr. LaLonde's influence. He was a personal friend and an outstanding human being in addition to being a demanding scholar. Dr. John R. Grabner served as a reader on the Dissertation Committee. Many improvements in the study came as a result of his guidance. His comments and sug­ gestions were very helpful and scholarly. Dr. James E. Robeson served as a reader on the Dissertation Committee and was a warm and encouraging person in many private consultations. His influence was great in helping to motivate the author to do his best and to see the project as a task which could be accomplished. Dr. James II. Davis served as a reader on the Dissertation Committee. His close reading and detailed comments were valuable in making the final product of much higher quality. Dr. Roger D. Blackwell made important contributions to the methodology of the study and interpretation of the data. He was willing to help at any time and was respon­ sible for a good deal of logical thinking and growth on the part of the author. Dr. Wayne Talarzyk was a key individual in helping the author understand statistics and statistical methodo­ logy. His help was willingly given and eagerly sought. The many members of the research panel who filled out and returned the completed questionnaires several times were of significant help. Without their cooperation the study could not have been accomplished. iii Carol Jones, an advisor in the Computer Department at Florida Atlantic University, gave many hours in advising the author on available programs and helping to get the data processed correctly on the computer. Finally, much gratitude and thanks are due to my wife, Irene, and the members of my family who had faith and gave encouragement all along the way. My wife typed the in­ numerable drafts and corrections and also the final manu­ script. Without her faith, encouragement, and help this project could not have been completed. VITA June 23, 1930................... Born - Price, Utah 1954..............................B .S . in Business, University of Utah, Salt Lake City, Utah 1954-195 5 ........................ Salesman, Procter & Gamble Company, in Northern Utah and Southern Idaho 1955-196 0 ........................ Manager, Forest Hill Market Salt Lake City, Utah 1960-1969........................ Owner and Manager of Silver Dollar Markets, Salt Lake City, Utah 1969-1972........................ Research Assistant, Technical and Business Services, The Ohio State University, Columbus, Ohio 1973.............................. M . A * in Consumer Behavior, The Ohio State University Columbus, Ohio 1973-1976........................ Assistant Professor of Marketing, Florida Atlantic University, Boca Raton, Florida FIELDS OF STUDY Major Field: Marketing Minor Fields: Consumer Behavior Logistics v TABLE OF CONTENTS Page ACKNOWLEDGEMENTS.......................... ii VITA ................................................. v LIST OF TABLES......... ............................ ix LIST OF FIGURES..................................... XV Chapter I. INTRODUCTION................................ 1 Nature and Purpose of the Study........ 1 Background................. .............. 4 Statement of the Problem................ 7 Guiding Hypotheses....................... 11 Methodology............................... 12 Limitations of the Study................ 15 Potential Contributions of the Study... 16 Organization.............................. 17 Summary................................... 20 II. CONTEMPORARY VIEWS ON CONSUMER CREDIT, CREDIT CARDS, AND RETAIL ELECTRONIC FUNDS TRANSFER................. 21 Historical Setting of Credit........... 21 Contemporary Credit Practices.......... 23 Volume of Bank Credit Card Usage....... 27 Electronic Funds Transfer............... 28 Point-of-Sale Technology in Retail Stores.......................... 3 8 Why the Interest in Computerized Credit by Banks, Retailers, and Computer Manufacturers................ 48 Credit Cards, Consumer Life-Style and Attitudes.......................... 62 vi Page Demographics and Life-Style of the Users of Credit and Credit Cards.......................... 65 Changing Consumer Attitudes Toward Credit and Credit Cards.................................. 69 Steps to an EFTS Economy............... 72 Summary.................................. 78 III. RESEARCH DESIGN............... ............ 81 Introduction............................. 81 The City National Bank Test ............ 81 Basic Design of the Research.......... 85 Sample Selection Procedure............. 87 Data Gathering Procedure.............. 89 Information Collected.................. 94 Data Analysis and Statistical Procedures............................. 96 Merchant In-Depth Interviews.......... 98 Merchant Questionnaires................ 100 Summary.................................. 101 IV. FINDINGS AND ANALYSIS OF THE RESEARCH.................................... 104 Introduction............................. 104 Findings Relative to the First Underlying Hypothesis................ 105 Findings Relative to the Second Hypothesis....... 109 EFTS Users Compared to Department Store Card Users...................... 113 Terminal Credit Card Use As An Alternate Method of Payment......... 118 Consumer Attitude Clusters and Use of Automated Credit Cards ........... 120 An In-Depth Analysis of Respondents Who Used the Automated Terminals.... 126 Findings From the Merchant Questionnaires........................ 131 Store Personnel Perception of the EFTS Test ......................... 131 Customer Understanding and Use of the Computer Console.............. 135 Merchant Response to Open-Ended Statements in the Questionnaire 136 vii Page V. SUMMARY AND CONCLUSIONS............... 140 Summary of Purpose and Design......... 140 Summary of the Research Hypotheses and Findings................