A structured equation modelling approach.pdf

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A Structural Equation Modelling Approachfor Assessing the Dimensions

of the Optimum Stimulation Level

Ildefonso Grande

ABSTRACT. The current scales for assessing the exploratory tendency

of consumers are mainly composite measures relied upon by the psy-chological characteristics of consumers with regard to their personality.At the present time, the available OSL (Optimum Stimulation Level)scales could be considered to be obsolete because they were devisedand worded years ago. The cultural environment in which they weredeveloped and tested is a major factor that could affect their validityacross different cultural scenes. In addition to this, there is the lack of complete scientific rigor in some of the tests of these measures and,consequently, their reliability could be doubtful.

The aim of this article is to review the relevant OSL measures and totest an exploratory behavior model based on the findings of this re-search. This paper is carefully structured into several sections: a reviewof the literature of the current OSL measures; an empirical test foridentifying the OSL subscales in a different cultural scene and a test to

verify these dimensions. Finally, and with the intention of shedding somelight on this area of consumer behavior in marketing, an exploratorybehavior model based on structural equations is proposed and tested.[Article copies available for a fee from The Haworth Document Delivery Ser-vice: 1-800-342-9678. E-mail address: Website:]

KEYWORDS. Scales, models, consumer behavior, marketing re-search, structural equation models, variety seeking

Ildefonso Grande is affiliated with the Departamento de Gestión de Empresas,Universidad Pública de Navarra, 31006 Pamplona (Spain) (E-mail: igrande@

unavarra.es).Journal of International Consumer Marketing, Vol. 12(3) 2000

2000 by The Haworth Press, Inc. All rights reserved. 7


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JOURNAL OF INTERNATIONAL CONSUMER MARKETING8

INTRODUCTION

For many years, scholars and practitioners have been concernedwith exploratory behavior of consumers. This characteristic makes theconsumer switch from one brand or store to another. On the one hand,companies may understand the switching behavior to be the result of their marketing efforts. But, on the other hand, the explanatory reasonsfor these facts may be internal as far as the individuals are concerned.

Extrinsic variety seeking is the consequence of marketing actions,group influences or external stimuli. And intrinsic variety seeking isan individual consumer characteristic, linked with consumers’ internalmotivations and the consequence of their optimum stimulation level(OSL).

Raju (1980) defines OSL as the property that characterizes an indi-vidual in terms of his general response to environmental stimuli. Indi-viduals do prefer a level of stimulation, termed optimum stimulationlevel. When this level is low, consumers try to increase their stimula-tion. But when they routinize their purchase process, their stimulationlevel decreases; and when this happens, they start to engage in varietyseeking in order to recover their OSL.

Such behavior, termed exploratory behavior, may lead the consum-ers to look for a variety of products, brands or stores to choose from.This means switching from one brand or store to another. Varietyseeking is the main consequence of the search for OSL. In their re-search, Steenkamp and Baumgartner (1992) suggested that the rela-

tionship between stimulation and consumers’ reactions follows aninverted U-shaped function. According to these authors, people tendto prefer intermediate levels of stimulation–OSL. And moreover, whatis considered as optimum stimulation level varies a lot among con-sumers. It may be expected that consumers with higher OSL engage inexploratory behavior more intensively than those who are character-ized by lower levels of OSL.

A great number of academics and practitioners from different fieldsof the social sciences have researched this topic. Psychologists andeconomists have devoted time and effort to understand this problem,and they have developed measures and devised new models.

Some of the important studies which deal with intrinsic or extrinsic

seeking, or with both, are: Venkatesan (1973); Bass (1974); Faison(1977); Laurent (1978); Moschis (1978); Holbrock and Hirschman(1982); McAlister (1982); McAlister and Pessemier (1982); Givon


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Ildefonso Grande 9

(1984); Joachimsthaler and Lastovicka (1984); Raju (1980, 1984);Lattin and McAlister (1985); Alba and Marmorstein (1987); Mazur-sky, LaBarbera and Aiello (1987); Carlson and Grossbart (1988);Hoyer and Brown (1990); Van Trijp and Hoyer (1991); Steenkampand Baumgartner (1992); Feinberg, Kahn and McAlister (1992); Kea-veney (1995); Menon and Kahn (1995); Baumgartner and Steenkamp(1996); Van Trijp, Hoyer and Inman (1996); Campo and Gijsbrechs(1997); Berné, Múgica and Yagüe (1997).

Moreover, I would like to point out that some empirical modelswere devised and tested by Raju (1980), Joachimsthaler and Lasto-vicka (1984), Kahn, Kalwani, Manohar and Morrison (1986), Mazur-sky, LaBarbera and Aiello (1987), Bawa (1990), Simonson (1990),

Van Trijp and Hoyer (1991), Steenkamp and Baumgartner (1992),Crouch (1994), Trivedi, Bass and Rao (1994), Baumgartner and Steen-kamp (1996), Keaveney (1995) and Van Trijp, Hoyer and Inman(1996), Berné, Múgica and Yagüe (1997).

In general, the tests that were conducted used data from differentproduct categories or services. Many of the tests focussed on externalvariety seeking without integrating the two aforementioned ap-proaches. So, in the strict sense of the word, the results cannot begeneralized to all product categories. In their research, Van Trijp,Hoyer and Inman (1996) did emphasize the need to separate a truevariety seeking behavior (or an intrinsic motivation for switching fromone brand or store to another)–an OSL derivation–from an extrinsic

variety seeking which is externally motivated. According to theseauthors, empirical studies have neglected this distinction; and it isassumed that the switch made by the consumer from one brand orstore to another is the consequence of the true variety seeking.

EXPLORATORY TENDENCY MEASURES

Since the 1960s, some authors have devised OSL measures. Themost important scales are: Change Seeking Index (CSI) (Garlingtonand Shimota, 1964); Novelty Experience Seeking (Pearson, 1970);Arousal Seeking Tendency I (Mehrabian and Russell, 1974); ArousalSeeking Tendency II (Mehrabian, 1978); and Sensation Seeking Scale

(Zuckerman, 1979). Table 1 summarizes these scales, subscales andtheir reliability measures.

The current OSL measures were devised and tested mainly in the


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TABLE 1. OSL Scales

USA years ago. On that point, the cultural environment in the USA isnot the same as the cultural environment in many other countries in theworld. Moreover, the consumer behavior may be different too. So,when researchers validate scales, they should expect two things: first-ly, their dimensions could vary from one cultural environment toanother; and, secondly, some of their original items could becomeirrelevant.

To validate the available OSL measures in this research, a randomlyselected sample of adults was surveyed. Some data were collected

from 762 adults using a questionnaire containing a seven-point Likert-type scale to measure the level of stimulation which a person mayprefer to have. The questionnaires included a set of items belonging toCSI, AST, NES and SSS scales and 646 of them were valid and used.

EQS is a powerful instrument for validating marketing constructs.This software is used for purifying scales. It is also used for isolatingthe dimensions of the construct, and for measuring its convergent anddiscriminant validity. By using EQS, it is possible to identify what thescales are measuring; and it is also possible to ascertain what therelevant items are. Different exploratory factor analyses suggested theinitial dimensions of the scales. Confirmatory factor analyses, by us-ing EQS, identified the relevant items of the scales and their contribu-

tion to the reliability, which was measured through parallel, congener-ic and tau equivalent models.

Table 2 shows the results. The letter ‘‘I,’’ followed by a number,


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Ildefonso Grande 11

TABLE 2. Confirmatory Factor Analysis of OSL Measures

shows the item order in the original scale in order to facilitate theiridentification.

In Table 2, and quantify the contribution of the items to thereliability and their errors in the estimate. These two parameters areessential for assessing the coefficient of the reliability of the scale,Cronbach’s , by means of this formula.

= (w)2 / [(w)2 + (w2]

Where w is equal to 1, / 2 or 1/ 2, when the model specification isparallel, congeneric or tauequivalent. The results of Table 2, considering

the reliability of the tested OSL scales, measured by parallel models, areCSI; 0.858; AST, 0.7207; SSS, 0.7504; NES, 0.6697. There is hardly anydifference among the results of alternative reliability models.


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The findings suggest that Arousal Seeking Tendency is a compositemeasure of risk, loyalty and innovation proneness. Sensation SeekingScale measures risk proneness; and Novelty Experience Seeking mea-sures external and internal sensations. These two dimensions have atendency to approach varied and novel experiences rather than toavoid them. The items in CSI are grouped in a single factor. Thismeans that CSI is a measure of pure exploratory tendency which ischaracterized by a single dimension.

This finding agrees with the research done by Steenkamp andBaumgartner (1995). These authors consider that it is highly desirablethat researchers should have a short and valid instrument for measur-ing this construct. They developed a short (7-item) version of the

Change Seeker Index cross-validated in three countries (US, Belgiumand the Netherlands).

In this research, the confirmatory factor analyses conducted suggestan alternative short (8 item) version of the CSI in Spain. This short-form of CSI appears to be an attractive alternative to the original95-item scale for researchers who want to study the role of OSL inhuman behavior in general, and in consumer behaviors with strongexploratory elements in particular.

Note that, in a different cultural environment, the scales do notmeasure the same dimensions, and the items are not characterized bythe same contribution to the scales’ reliability. After doing these tests,a number of conclusions should be drawn.

Current OSL scales are composite measures of individual’s psy-chological characteristics with regard to the personality of the in-dividual, and their items or subscales may be unfamiliar to mar-keters.

The adequacy of a current OSL scale for measuring the explor-atory tendency could be doubtful because the construct includesa set of items worded many years ago.

Although researchers may conduct their research works in orderto assess OSL by using questionnaires based on the scales whichare mentioned in this article, their inadequate adaptation to dif-ferent cultural environments may lead to wrong conclusions. Re-

searchers should make every effort to validate the OSL scales inaccordance with the different cultural scene they may comeacross.


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Ildefonso Grande 13

A new OSL assessment should be based on some familiar mar-keting variables; and these variables should be different from thepsychological ones. Consumers’ demographic indicators couldbe a matter of importance when trying to identify market seg-ments in order to develop specific marketing strategies that willmatch their current or expected behavior.

A THEORETICAL JUSTIFICATION OF THE OPTIMUM

STIMULATION LEVEL DIMENSIONS

The previous discussion and the empirical test (CSI, AST, NES,SSS) suggest that an alternative OSL scale could be a compositemeasure of risk, loyalty and innovation proneness. However, and withregard to the links found empirically, I do consider that an additionaltheoretical justification of these findings is necessary before buildingthe model.

The basic theory of consumer behavior shows that there are linksbetween OSL and risk. Consumers are constantly making decisions asregards the goods they buy and the services they need. The conse-quences of their decisions are often uncertain; so, the consumers facesome risks in making their decisions. When consumers engage in aroutine buying process, their stimulation level could decrease. It iswidely known that when this happens, they may try to be innovativeby changing their habits of going to the same stores and buying the

same products, or they may opt for new products or different brands of the same product category.

The purchase process involves facing some risks. Some of the risksare: financial risk or loss of money; physical risk to oneself or toothers which the product may pose; functional risk, in the case that theproduct may be below standard (not as good as what is normal orrequired); social risk, when the choice may result in a social embar-rassment; psychological risk associated with unsatisfaction derivedfrom an unfortunate choice; time risk, when the consumers have thefeeling that the time spent in searching for the product has beenwasted. Conservative consumers are not expected to engage in explor-atory behavior. By contrast, risk takers increase their stimulation level

when they explore different brands, products or stores.Some authors associate risks with OSL. Raju (1980) found high

correlation between risk taking and OSL. Brunning, Koviac and Ober-


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dick (1985) also found that some consumers enjoy taking risks whenthey choose from the different alternatives open to them. Zuckerman(1979) stated that OSL is expected to be positively related to risk-tak-ing behavior. More evidences of this are found in Steenkamp andBaumgartner (1992) and Van Trijp, Hoyer and Inman (1996). Then, afirst hypothesis may be stated:

H1: The greater the OSL of the consumers, the higher their risk acceptance

In the context of this research, loyalty should be understood as anindividual characteristic or the tendency to buy the same brands at alltimes or to buy things in the same store. It should not be understood as

the consequence of marketing strategies. This variable is also linkedwith OSL and apart from being a topic widely researched into sincethe 1960s, it is one of the cornerstones of the company’s marketing.

When consumers simplify their purchase decisions, they usuallybuy the same brand in the same store. When their stimulation leveldecreases, they complicate their buying process by engaging in varietyseeking. This means that they go in search of different brands orstores, or they go in search of both things at the same time. It may beexpected that consumers with a lower OSL will tend to be loyal, andconversely, consumers with higher OSL will tend to be disloyal.

The research works developed by Farquhar (1989) and Kapferer(1992), support the existence of links between OSL and loyalty. Then,

a second hypothesis may be stated,

H2: The higher the OSL of the consumers, the lower their overallloyalty

Innovative behavior is the adoption of a recently introduced product,independent of any interpersonal communication concerning experi-ences with the product (Midgley and Dowling, 1978). When the stimu-lation level of the consumers decreases, they may try to be innovative inorder to increase it. Innovative consumers show the tendency to trygoods or services on their own initiative before they are told of otherconsumers’ experiences and reports. Some authors have done researchworks which support the links between the OSL and the innovative

behavior [see, for example, Schiffman (1972); Leavitt and Walton(1975); Raju (1980); Price and Ridgeway (1983); Foxall and Bathe(1991); Burns and Krampf (1992); and Steenkamp and Baumgartner


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Ildefonso Grande 15

(1992)]. In their research works, they came to the conclusion that thereis a strong relationship between OSL and innovative behavior. Con-sumers characterized by a higher OSL will tend to explore amongbrands to a greater extent than others who are characterized by a lowerOSL. Based on their research works, a third hypothesis may be stated.

H3: The greater the OSL of the consumers, the greater their in-novation proneness

THE DEVELOPMENT OF AN ALTERNATIVE SCALE

FOR ASSESSING OSL

Considering the theoretical and empirical dimension of current OSL

scales, the next step will be to devise a new measure for assessing thedimensions of the exploratory tendencies of the consumers. Accordingto the findings in Spain, the new instrument should be a compositemeasure of risks, loyalty and innovation proneness.

The literature provides many scales for measuring these variables.Some authors, including Craig and Gintner (1975), Leavitt and Walton(1975), Raju (1980), Dikerson and Gentry (1983), Hawes and Lump-kin (1984), Oliver and Bearden (1985), Fisher and Price (1992), Fish-er (1993) and Price and Ridgeway (1983) and Goldsmith and Hofack-er (1991), have devised excellent scales for measuring innovationtendency.

Many authors, like Raju (1980), Hawes and Lumpkin (1984), Hozi-

er and Stem (1985), Beatty and Kahle (1988), Carlson and Grossbart(1988), Litchenstein, Netemeyer and Burton (1990), devised differentmeasures for assessing the propensity of a human being to be loyal togoods, brands, services or stores. And some authors, like Murray(1985), Murray and Slachter (1990), Venkatraman and Price (1990)and Venkatraman (1991), have devised measures for assessing per-ceived risk.

The new OSL measure proposed in this paper, ETS, (ExploratoryTendency Scale) has been devised by using some items taken from theabove mentioned scales. After a process of trial and error based onexploratory and confirmatory factor analyses, I would like to proposethe following items for an alternative OSL measure.

1. When I buy a product, I feel uncertain about it after buying it.2. When I choose among products, I often doubt whether to take

this or that.


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3. I am never sure of myself after choosing a product.4. Once I choose a brand, I forget the others.5. Once I choose a brand, I hate changing it.6. If I like a brand, I seldom change my mind just for the sake of

trying something different.7. Even when the same product is available in different brands, I

tend to buy the same brand.8. Modern art is a stimulant.9. I like to try new and different things.

10. I like to try new ways of doing things.

To test ETS, a second random sample was selected. The former

sample was only used for identifying the dimensions of current OSLmeasures. It was not used for testing ETS because it could causespurious correlation. The data for testing ETS were gathered from 689adults; and they were recorded in a questionnaire, containing a seven-point Likert-type scale. The questionnaire was prepared with itemsfrom ETS, CIS, AST, NES and SSS short version. Finally, 563 ques-tionnaires were used.

An exploratory factor analysis of the items of ETS was done and itgrouped the items in three dimensions (see Table 3). The correlationsuggests that factor 1 is linked with risk (items 1-4), and that factors 2(items 5-7) and 3 (items 8-10) deal with loyalty and innovation prone-ness. Table 4 displays the results of confirmatory factor analyses of the

subscales.The parameter in Table 4 is the contribution of each item to thereliability. This value ranges from 0 to 1. The higher its value, the

TABLE 3. ETS Exploratory Factor Analysis


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TABLE 4. Subscales Confirmatory Factor Analysis

greater its contribution to the reliability. measures the error in theestimate. It ranges from 0 to 1. It is desirable to find a low and a high. Anyway, 2 + 2 = 1.

For reliable results, the parameters CFI, NFI must be higher than0.9 and AOSR must be lower than 0.05. The goodness of the fitsuggests that the items, included in the new measure for the explorato-ry tendency scale, are relevant.

Table 5 shows the discriminant validity test to ensure that the sub-scales do not share similar dimensions. If we compare the (2 differ-

ences between the models and fix the correlation as equal to one or asfree parameter, the models are significantly different. So, there aresome evidences of discriminant validity among the subscales. Onecomes to this conclusion because the 2 differences between modelsare greater than critical values 2 1% /1 or 2 5% /1. This test suggeststhat the different groups of items in ETS measure different dimen-sions.

After carrying out the discriminant validity test of the scale, the nextstep is to measure its reliability. Table 6 displays the Cronbach’s alphaof the subscales fitting parallel, tau equivalent and congeneric models.Take note of the fact that there is hardly any difference in the esti-mates. In fact, all the figures are high enough to justify the reliability

of the scale. Table 7 displays the joint reliability of ETS.At this stage, one may come to the conclusion that ETS is a reliable

scale; but it is necessary to test its convergent validity with other OSL


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TABLE 5. Discriminant Validity Tests

TABLE 6. ETS Subscales Cronbach’s Alpha

TABLE 7. ETS Estimated Cronbach’s Alpha

measures. Table 8 displays the correlation matrix, standard deviationand p-values, among CSI, AST, NES, SSS and ETS. Correlation sup-ports convergent validity among current OSL scales and the newinstrument, ETS.

AN EXPLORATORY BEHAVIOR MODEL

The next step in this research was to build and to test an exploratorybehavior model linking OSL, risk, loyalty and innovation proneness.The theoretical and empirical justification of the dimensions and theirlinks have been shown in sections 3 and 4. According to what was saidin those sections, the proposed exploratory behavior model in thisresearch is shown in Figure 1.

The short 8 items Spanish version of CSI was used for measuringOSL, and related variables were measured from the items of ETSmeasuring risk, loyalty and innovativeness. The data come from the


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TABLE 8. OSL Scales Correlation Matrix

second sample sized 563 individuals. The goodness of the fit of thecausal model appears in Table 9.The model equations are,

Risk = 0.712 CSI + 0.567 Innovativeness + 0.580 e1(0.02) (0.03)

Loyalty = 0.743 risk – 0.653 CSI – 0.456 Innovativeness + 0.453 e2(0.01) (0.000) (0.04)

Innovativeness = 0.770 risk + 0.638 CSI + 0.367 e3

(0.001) (0.02)

Numbers in parentheses show p-values.These results trust the goodness of the fit, and the signs of the

coefficients are the expected. Note that risk is positively and stronglylinked with OSL and innovation proneness. This means that consum-ers characterized by high OSL and innovators are more risk takersthan others.

As expected, the second equation suggests that risk avoiders, con-servative consumers and those who are characterized by lower OSLtend to be loyal.

Finally, the third equation shows that risk takers and consumerscharacterized by higher levels of OSL tend to be more innovators than

others.The stated hypotheses in paragraph 3 cannot be rejected. It may be

concluded that,


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The greater the OSL of the consumers, the higher their risk ac-ceptance.

The higher the OSL of the consumers, the lower their overall loy-alty.

The greater the OSL of the consumers, the greater their innova-tion proneness.

FIGURE 1. A Structural Relationship Among OSL and Related Variables

CSI

RISK

LOYALTY

INNOVATIVENESS

TABLE 9. Goodness of the Fit of the Structural Model Linking OSL and RelatedVariables


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CONCLUSIONS

This research began with a discussion of the most used scales formeasuring the exploratory tendencies of consumers. These constructswere developed in a particular cultural environment, and they aresupposed to be adapted to other contexts. It was proved that the di-mensions which they give in the USA do not agree with the dimen-sions they give in Spain. So, and from an international perspective,there are differences between consumers in one country and consum-ers in another country.

On the other hand, the scales used for measuring the exploratorytendencies of consumers do have a strong sociological component.They may be now obsolete, and their wording may not be very famil-iar to those who are in charge of marketing in the companies.

These discoveries account for the development of an alternativescale for measuring the Optimum Stimulation Level. The new instru-ment has taken the dimensions detected in Spanish consumers, and thedeficiencies observed in the former scales, into consideration.

The new scale is based on the theoretical basis of the consumerbehavior. From a methodological perspective, the scale was validatedby using statistical methods like confirmatory factor analysis andstructural equation models. The results show the convergent and dis-criminant validity of this scale. From the scope of marketers, thisinstrument has a big advantage over the previous scales. This scale issimple, short and reliable.

The proposed model supports the stated hypotheses. The resultsmatch the theory of consumer behavior. It may be concluded that OSLis a relevant variable that explains how consumers behave, because itaffects the risk acceptance, the loyalty and the innovation proneness.Additionally, higher OSL affects positively new products diffusion.

The marketers are concerned with the market segmentation. Theywant to identify groups of consumers in order to prepare adequatestrategies for them. One of the most useful criteria for segmenting themarkets is the loyalty of the consumers. The scale which was devel-oped in this research measures the exploring tendencies, an undesir-able characteristic in consumer behavior which is against the tendencyto be loyal.

The application of this instrument can make it possible for themanagers to identify the profiles of the consumers, variety seekers andthose who show loyalty. In that case, it will be sufficient to include


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indicators of sociodemographic nature about buying habits, togetherwith a scale proposed in this research, in the questionnaire. The scalewhich is proposed in this research is very simple to respond to and itwill not make the consumers get bored. The information can be ana-lyzed together, and the consumer profiles related to OSL can be ob-tained by means of multivariate analyses.

In this way, companies can identify the characteristics of the con-sumers and their buying behavior. This will contribute to improve theplan of the strategies for marketing, pricing, product design, promo-tion and placement.

If the marketers knew how to identify two market segments, loyalconsumers and variety seekers, it would be possible for them to design

loyalty strategies for those consumers with slight or moderate explor-atory tendencies. On the contrary, consumers with high levels of OSLdo change from one brand or store to another; and this behavior is notdue to the actions of the companies because the strategies of consumerretention are not so efficient.

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Submitted: November 1998First Revision: March 1999

Second Revision: May 1999Accepted: August 1999

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