Drivers Of Willingness Research Articles

Preferences for micro-cogeneration in Germany: Policy implications for grid expansion from a discrete choice experiment

Increasing the share of renewable energies requires an extension of grid capacity and additional storage possibilities. Although load shifting has been identified asa key instrument to relieve an overloaded grid, technologies that enable the decentralization of load shifting have hardly penetrated the electricity market. In this paper, a discrete choice experiment is applied to investigate preferences and willingness to pay values for micro-cogeneration, a technology that has huge potential to enhance load shifting, and at the same time reduce costs and CO2 emissions for heating. Our study includes homeowners as well as tenants to capture the overall market potential. Drawing from a sample of 412 adult Germans, several drivers of willingness to pay for micro-cogeneration are identified such as cost and CO2 saving potential, contract specifics and a feed-in tariff. The results show that most people would be willing to invest in micro-cogeneration technologies but non-monetary obstacles, such as limited institutional support, hinder investment on a larger scale. Several sources of preference heterogeneity are identified, giving rise to the development of a large variety of products and incentive structures.

Pricing hybrid bundles by understanding the drivers of willingness to pay

Many companies are increasingly selling hybrid bundles, which comprise one or more goods and one or more services. Hybrid bundle pricing depends on understanding consumer willingness to pay (WTP) for the bundle, which rests on trade-offs among the benefits from four key drivers: service autonomy, complementarity, service quality variability, and overall bundle quality (basic vs. premium). The effects of these drivers and their interactions on the WTP of hybrid bundles are unknown. The authors develop hypotheses and test them rigorously using incentive-aligned choice-based conjoint and hierarchical Bayesian analysis. The results offer important guidelines for developing appropriate hybrid bundles. If a typical firm under budget constraint has to offer either of two hybrid bundles, one with high complementarity or one with service autonomy, the results suggest that it should offer the bundle with high complementarity. Furthermore, contrary to the conventional wisdom of minimizing service quality variability for premium quality bundles relative to basic quality bundles, the results recommend lowering service quality variability for basic quality bundles but maintaining it for premium bundles.

What are domestic apples worth? Hedonic responses and sensory information as drivers of willingness to pay

The effects of written information of key sensory characteristics of apple cultivars on hedonic ratings and willingness to pay (WTP) were measured in an experimental auction. Participants (n=118, 95F, 23M, mean age 37y.) rated, in three subsequent rounds, pleasantness and WTP based on (1) appearance only (n=25), (2) appearance, written information and tasting (n=44), or (3) appearance, tasting and written information (n=49). Four domestic cultivars were described as medium sour and crispy (‘Amorosa’), sour and medium crispy (‘Konsta’), medium sweet and medium crispy (‘Lobo’) and sweet and medium crispy (‘Tobias’). The differences between the cultivars in pleasantness and WTP were minimal when the evaluation was based on appearance only. The effect of tasting after visual inspection was positive in three cultivars and negative in one (‘Konsta’). Written information after tasting did not affect pleasantness or WTP. For one cultivar (‘Tobias’), information given before tasting created expectations that were not fulfilled, thus tasting decreased hedonic ratings and WTP. Mean WTP was 2.36euro/kg. When pleasantness increased by one point, WTP increased by 0.31–0.45euro/kg. Regression models showed that pleasantness explained 38–55% of WTP. Respondents who reported consuming domestic apples more often than once a week had 0.52–0.74euro/kg higher WTP than those who consumed them less frequently, suggesting that familiarity with the product increases WTP. Results indicate that both written information and tasting contribute to the ratings of pleasantness and WTP.

Assessment of willingness to pay for renewables in Lithuanian households

The paper aims to assess the main drivers of willingness to pay for renewable electricity of Lithuanian households. The paper deals with assessments of willingness to pay for renewables and reviews the situation of renewable electricity generation and consumption in Lithuania and compare achieved results with studies conducted in other countries. The pilot empirical study for the assessment of Lithuanian households willingness to pay for electricity produced from renewables was conducted. Though the estimates of WTP may be biased by due to the possible non-representativeness of the returned questionnaires and social-economic characteristics of focus group and the effects of information provision can be also overestimated some important findings can be obtained from this study. The results of study indicated that information and environmental awareness play the crucial role in willingness to pay for renewables in Lithuanian households. The study also presented that persons having higher income and higher education are willing to pay more for electricity produced from renewables in Lithuania. These results do not contradict with studies conducted in other countries. Information has positive impact on increase of WTP in other studies as well. The gender and age does not have significant impact on WTP. The assessed WTP of Lithuanian households is significantly lower than subsides for renewable electricity provided in the form of feed-in prices in Lithuania, therefore, the paper recommends to review feed-in tariffs for renewable electricity in Lithuania and to develop a reasonable energy pricing and incentive system.

Linking a Multi-Component Model of Commitment to Customer Profitability

SUMMARY Firms heavily invest in Relationship Marketing (RM) activities in the belief that such programs initiate a chain of effects leading to enhanced commitment and customer profitability (Palmatier, Gopalakrishna, and Houston 2006). This applies especially to service firms where relational variables like commitment are in focus as service delivery constitutes an interactive process (Verhoef, Franses, and Hoekstra 2002). However, researchers have begun to question the relationship between commitment and the bottom line. Moreover, studies find that more intensive and longer relationships do not necessarily result in loyal customers costing less to serve and paying higher prices (Reinartz and Kumar 2000). One explanation may lie in the fact that measuring commitment as a monolithic construct may be a gross oversimplification. Bansal, Irving, and Taylor (2004) emphasize that the psychological states underlying commitment need to be considered in order to understand customers’ behavior, hence proposing a three-component conceptualization of commitment. Thus, examining the link between the multiple commitment construct and profitability could be a much more fruitful avenue for investigating the patterns of leveraging profits in RM. However, this has not been studied so far. A next unresolved issue is how the impact of commitment constructs on profitability evolves over time. To our knowledge no study has addressed the issue of dynamics between multiple commitment constructs and profitability measures so far. This is crucial for adapting RM efforts to the specific drivers of value creation for novice vs. long-term customers. The issue of relationship stage-specific RM activities lead directly to the question on how the commitment constructs can be managed effectively by specific RM instruments like special treatments and brand communications. We estimated our structural equation model using data from a service context, i.e., hair salon customers (n = 695). In this way, we succeeded in linking a four-component model – consisting of affective, calculative, lockedin, and normative commitment – to customer profitability in terms of willingness to pay more (revenue-increasing) and co-production (cost-reducing) as the main drivers of customer profitability for service providers. Thereby, we demonstrate differential profitability impacts of the commitment constructs. We show that commitment-related investments are a double-edged sword: While affective commitment enhances the willingness to pay more, it inhibits co-production at the same time. This is because customers may feel emotionally kidnaped by the service employees. Further, locked-in customers are willing to pay more due to a lack of switching options, however, they refuse to co-produce. In this way they avoid to get proactively engaged in the relationship with the service provider in order to keep the option to have an easier exit. Contrary, normative and calculative commitment drives both profitability measures. Further we reveal a moderating effect of relationship age on each commitment construct. Most strikingly, value consciousness becomes dominant as relationships evolve, i.e., customers are only willing to pay higher prices or to co-produce if they get more “bang for the buck,” The ability to calculate the value of the relationship increases as customers learn about the company’s procedures and offers; they are better able to precisely judge the economic trade-off between benefits and costs leading to the dominance of calculative commitment in driving purchase behavior. As the importance of cognitions increases, the influence of affect on profitability measures diminishes. In addition, normative commitment’s influence on willingness to pay more declines the longer the customers do business with the service provider. Concerning locked-in commitment, the importance is diminishing over time from a strong to a non-significant effect on profitability constructs. Obviously, in later stages, the drivers of willingness to pay more and co-production shift from lockedin commitment to the calculative and normative counterparts.