Bill prioritisation and bill payment orientation in the developing country context. Joseann Knight* and Donley Carrington

Transcription

1 Int. J. Services, Economics and Management, Vol. 10, No. 1, Bill prioritisation and bill payment orientation in the developing country context Joseann Knight* and Donley Carrington Department of Management Studies, Faculty of Social Sciences, University of the West Indies, Cave Hill Campus, Cave Hill, St. Michael, BB 11000, Barbados josanne.knight@cavehill.uwi.edu donley.carrington@cavehill.uwi.edu *Corresponding author Abstract: Adverse economic conditions often result in bill payment default by consumers and compromised accounts receivable for service providers. Default is especially problematic in developing countries where the average consumer has less spending power. Yet, international service brands know very little about the debt attitudes of developing country consumers. Using Maslow s hierarchy of needs framework, this paper examines whether consumers adopt a hedonic or a utilitarian approach to bill prioritisation activity. Knowing the relative importance of one s service better equips the service provider to develop compelling communications to support or to enhance consumers perceptions if need be. The study also introduces service bill payment orientation (SBPO) which measures how consumers view bill payments in general, thereby contributing to the newly emerging literature on the debt attitudes of developing country consumers. The findings of the study point to a utilitarian bill payment approach and suggest that SBPO may be more a consequence of national culture than of demographic differences between consumers. Keywords: services; bill payments; service bill payment orientation; SBPO; accounts receivable; hedonism; utilitarianism; bill prioritisation; subscriptions; Maslow s hierarchy of needs. Reference to this paper should be made as follows: Knight, J. and Carrington, D. (2019) Bill prioritisation and bill payment orientation in the developing country context, Int. J. Services, Economics and Management, Vol. 10, No. 1, pp Biographical notes: Joseann Knight is a Lecturer in Marketing and Consumer Behaviour at the Cave Hill Campus of the University of the West Indies on the island of Barbados. Donley Carrington is a Lecturer in Accounting, Investments and Wealth Management at the Cave Hill Campus of the University of the West Indies on the island of Barbados. Copyright 2019 Inderscience Enterprises Ltd.

2 2 J. Knight and D. Carrington 1 Introduction The service sector now accounts for over 70% of global GDP, and the international services sector continues to grow at a phenomenal pace (The World Trade Organisation, 2015). However, as international service marketers seek to diversify into untapped developing country markets, economic conditions and weak consumer spending power can present a challenge to service quality and service reliability and can comprise venture profitability and viability (Samiee, 1999; Kayaga et al., 2004). Faced with small and sometimes insufficient income, developing country consumers often struggle to meet their basic needs for food and shelter (Jah, 2013; United Nations, 2018) and reoccurring bills for services such as electricity and water can go unpaid. In examining the limitations faced by water utility companies operating in Africa, Kayaga (2002) noted that these service providers often struggle to recover even 50% of their total accounts receivable in any billing cycle. Service providers in Latin America can also encounter similar challenges since 61% of the approximately 550 million consumers in this developing region have no bank account and no access to credit card facilities (Ericsson Consumer Lab, 2013). Research has demonstrated that when cash is short, credit cards serve as a fall back mechanism for consumers in advanced countries such as the US (Bearden and Haws, 2012). However, this economic buffer is not part of the lived experience of the average person in the developing world, especially not for those persons at the bottom of the economic pyramid (Prahalad, 2005). Undoubtedly, service marketers seeking to diversify into a new developing country will conduct an a priori assessment of consumer spending power. However, service marketers may be better served by ensuring to include an assessment of the debt and money attitudes of consumers in the proposed host country before establishing operations, since even advanced country consumers exhibit negative debt payment attitudes when spending power is threatened. Hausman (2010) noted that financial difficulties faced by British consumers as a consequence of the 2008 global recession were exacerbated by compulsive buying, impulse shopping and spending to support addictions. Moreover, disconnection of electricity bills as a consequence of non-payment by US consumers continues to rise, though the economy has witnessed substantial recovery since 2008 (Polson, 2017). Whereas several studies have assessed the reaction of advanced national consumers to the financial pressures of the 2008 recession, very little is known about the recessionary coping mechanisms of consumers in the developing world (World Bank, 2015). Given that the recent global recession has not yet ended in some parts of the developing world (Warner, 2014; Leahy, 2016; Gandel, 2016; Alexe, 2017; Smith, 2018), the need to understand the money and debt attitudes of developing country consumers is even more pressing at this juncture in global economic history. Using the Maslow s hierarchy of needs framework, this paper measures whether consumers in the small middle-income developing country of Barbados adopt a utilitarian or a hedonic orientation (Hirschman and Holbrook, 1982) towards the prioritisation of bills, since this will determine which service and utility subscriptions usually get paid and those which may be allowed to fall into arrears, especially during recessionary periods. By considering which bills take priority for payment, the study gives service marketers a clearer understanding as to their importance relative to other service types. If for example, it is demonstrated that consumers place the gas bill very low in the importance hierarchy, communication strategies can be developed by the providers of this

3 Bill prioritisation and bill payment orientation 3 service to emphasise the importance of gas to a smooth-running household. Knowing consumers perceptions of your service relative to competing ones can also lead to the development of price modification strategies that will enhance profitability, while maintaining customer loyalty. (Al-Mawali et al., 2012). If for example the gas bill is 30% less than the electricity bill on average, but is shown to be equally important to the consumer, a small upward modification of price (within the confines of an understanding of the service s price elasticity) may be achieved without any significant reduction in customer satisfaction or gas usage. Previous research into bill payment delinquency has focused almost exclusively on credit card debt and has been restricted to the study of advanced economies (Xiao and Yao, 2014; Getter, 2003; Lyons and Fisher, 2006; McCloud and Dwyer, 2011; Sun and Xiao, 2007). In an extensive search of literature, only one developing country study was found which did not focus on credit card debt. In that study, Kayaga et al. (2004) examined the attitudes of Ugandan consumers to the payment of water bills and found that some of the delinquency could be explained by the perception that water was a public good which should be provided to the citizens free of cost. This finding further emphasises the need for international service providers to measure debt attitudes in individual developing countries before venturing out. Rather than focusing on delinquency in the context of a single bill or subscription, as has been the pattern in past research, the paper takes a macro-level approach to bill prioritisation by measuring service bill payment orientation (SBPO) and the demographic factors that may influence it. Conceptualised by this study, SBPO captures how consumers view bill payment in general, and moves the literature pass its almost singular focus on credit card debt delinquency. The remainder of the paper is as follows. A rationale for the choice of Barbados as the research site is given, after which the literature review and the resulting study hypotheses are presented. These are followed by a discussion of the research methodology and the presentation of the research findings. The paper concludes with a discussion of managerial implications, before identifying areas for future research. 2 The suitability of Barbados Barbados qualifies as a suitable site for testing the hedonic and utilitarian dimensions of bill prioritisation in at least three respects. First of all, it is a middle-income developing nation which ranks very highly on the United Nations Human Development Index (UNDP, 2015) rather than a lower income developing nation, where the average consumer may not subscribe to the more hedonic type services such as cable television. While individuals in many lower income developing countries have yet to fully satisfy their physiological and safety needs, individuals in developed and higher income developing countries like Barbados have the financial means to address both lower level and higher level (prestige, belonging, entertainment and stimulation) needs (Malhotra et al., 2005). The middle-income classification of Barbados and the remaining islands of the English-speaking Caribbean have made them very attractive to international service brands such as Digicel and Direct TV in recent years (UNDP, 2015; Dowrich-Phillips, 2013; Kretzberg, 2008).

4 4 J. Knight and D. Carrington Secondly, the need to prioritise bills does present itself in the Barbadian environment since credit card penetration is lower than countries like the US, where even dependent students have ready access to credit facilities (Hogan et al., 2013). Barbadian banks, like banks across the Caribbean region, tend to perform due diligence, and only offer credit cards to persons who can show what is deemed to be a high and a continuous enough stream of income to properly service credit card debt (White, 2007; World Bank Group, 2015). Lastly, the country has experienced significant economic instability from 2008 to the present, with increased levels of utility payment delinquency and insurance payment default being reported in the national newspapers (Holder-Olutayo, 2014; Price, 2015; Madden, 2018). 3 The literature review 3.1 Hedonic consumption In defining hedonic consumption, Hirschman and Holbrook (1982, p.92) refer to the facets of consumer behaviour that are multisensory, fantasy-based and emotive, and include touch, sounds, smells, tastes and visuals. Hedonic consumption is driven by the need for variety, new experiences, and by a desire for freedom from everyday drudgery (Wakefield and Barnes, 1996). Hedonism is typically measured as a value which speaks to self-indulgence and sensuous gratification and shapes attitudes and behaviour (Rokeach, 1973; Schwartz, 2012). In contrast, utilitarian consumption is grounded in the concepts of functionality, practicality and cost effectiveness. The utilitarian approach to consumption is manifested in emphasis on cost savings, product longevity and needs rather than wants (Batra and Ahtola, 1991). No good or service can be described as totally hedonic (or utilitarian) but primarily so (Okada, 2005). Some goods may even be equally hedonic and utilitarian. For example, internet subscriptions may be just as much driven by a need to complete work-related tasks as it is to engage in pleasure surfing. The hedonism-utilitarianism framework has largely been restricted to research into the purchase of tangible goods and experiential goods such as a movie (Neeley et al., 2010). The few studies into the hedonism-utilitarian aspects of services have considered customer satisfaction with hedonic services versus utilitarian services (Wirtz and Meng, 2003) the use of visualisation cues in the advertising of utilitarian and hedonic services (Hill et al., 2004) the appropriateness of flat rate pricing for hedonic services (Uhrich et al., 2013) and more recently, the use of hedonic framing for services that offer both pleasure and pain (Liu et al., 2018). However, a comprehensive review of the literature reveals no study into whether weekly/monthly payment obligations for services are fulfilled in accordance with hedonic motives or utilitarian motives, though service bills can be differentiated when placed on the hedonism-utilitarianism continuum. Past research indicates that though hedonic purchases are more appealing, consumers find it easier to justify the purchase of necessities over the more hedonic luxuries since guilt is associated with buying for pleasure (Kivetz and Zheng, 2006; Prelec and Loewenstein, 1998; Dhar and Wertenbroch, 2005; Kivetz and Simonson, 2002).

5 Bill prioritisation and bill payment orientation 5 These findings must however be contrasted with those that highlight increasing self-indulgence and a focus on consumption over utility on the part of consumers in advanced and developing economies (Yerex, 2010; Ogden and Cheng, 2011; Ghadrian, 2010; Hofmeister and Neulinger, 2011). Consumers have also indicated a tendency to pre-commit to creature comforts or indulgence to correct the perceive lack of leisure and recreation (Kivetz and Simonson, 2002). More importantly, the increasing violations of basic reasoning in consumption activity highlighted by Shugan s (2006) review of empirical studies on consumer rationality raises the question as to whether the pleasure-seeking evident in the purchase of tangible goods may also moderate bill payment activity. It is that very question that this study can answer. 3.2 Maslow s utilitarianism Whereas hedonism has been broadly conceptualised in the social sciences as an affinity for pleasure seeking; utilitarianism, with its longer research history, has found greater specificity in definition through several theoretical frameworks such as Maslow s hierarchy of needs (Maslow, 1954, 1970). Grounded in traditional economics, Maslow s (1970) theory rests on the tenets of need hierarchy and need progression. He proposed that physiological needs form the first rung of the hierarchy and must be fulfilled before the individual is motivated to move up. physiological needs are those that must be met for survival, these being the need for food, shelter, water and air. Next are security needs which are geared towards achieving security, stability, and protection from crime and unforeseen events. The third level comprises the social needs for belonging, love and affection, and the fourth speaks to the desire for reputation, the respect of others, self-esteem and prestige. The final level of Maslow s hierarchy is referred to as self-actualisation or the need to feel self-fulfilled and to reach one s fullest potential. Maslow s hierarchy of needs theory has been selected as the theoretical lens for this study primarily because it is structured around the categorisation and prioritisation of human needs. It therefore lends itself to conceptualising how humans go about assigning importance ratings to paying for the various services that cater to those needs. Though Maslow s hierarchy is by far one of the most influential motivational theories ever advanced (Acevedo, 2018; Maddock and Fulton, 1998) and is a standard inclusion in business and consumer behaviour texts (see Solomon, 2014 and Schiffman and Kanuk, 2009) it has been subject to little empirical analysis and testing (Acevedo 2018). Moreover, the limited number of empirical investigations undertaken after the theory was first introduced (see Wahba and Bridwell, 1976 for review) raised questions as to its validity. These early empirical challenges created an opportunity for several critiques of Maslow on philosophical and conceptual grounds. From a philosophical perspective the framework has been interrogated for its portrayal of the human being as singularly pursuing materialistic needs without spiritual, ethical or communal motivations (Guillén et al., 2015; Garrison, 2001) The question as to whether humans experience needs in the order specified by Maslow has been the most frequently voiced criticism of the theory (Gawel, 1997). Several papers have also cast doubt regarding the meaning of self-actualisation the highest order need in Maslow s hierarchy (Acevedo, 2018; Thielke et al., 2012). Most recently, the discussion has turned

6 6 J. Knight and D. Carrington to whether this intrinsically individualistic framework applies in collectivist nations such as those in Africa and Asia (Gambrel and Cianci, 2003) leading researchers to call for additional research to investigate its cross-cultural relevance (Loh et al., 2000; Schultz, 2010). Nevertheless, there are now a handful of studies which suggests the merit of Maslow s theory, though conceptualising around the self-actualisation need continues to prove problematic (Thielke et al., 2012). Namely, the framework has demonstrated usefulness in explaining how individuals and nations seek to develop and improve their quality of life (Haggerty, 1999; Wicker et al., 1993), and in describing the health-related behaviours of older adults (Acton and Malathum, 2000). The relevance of Maslow for describing how people seek to improve their quality of life and maintain their health suggests that though the theory may not be appropriate for make sweeping generalisations about how human beings progress and are motivated through life, it may indeed be suited for explaining more specific social and economic situations where individuals have aspirations and ideals, but are forced, due to limited resources of time, money and influence to undertake ongoing cost/benefit analysis and need rationalisation. When one considers health related behaviours for example, persons with little income may experience a continuous latent concern about personal health, but health care maintenance through annual physicals, colonoscopies and dental visits will take second place to the more pressing and immediate physiological needs (Thompson et al., 2016). It is only when the individual at the bottom of Maslow s hierarchy falls ill that the singular pursuit of food, clothing and shelter may be brought into question. If, in the course of time, the financial state improves, greater attention can be paid to latent concerns regarding health and the individual can begin to strive for the mental and emotional security that comes from engaging in the various health maintenance behaviours such as annual physicals. Further increase in financial resources motivate a move to the belonging level of the hierarchy through gym and health club memberships and investment in paid medical care schemes. Lifestyle changes such as marriage and parenthood will also drive a move to the belongingness rung as the physical wellbeing of significant others will become equally, if not more important than that of the individual. The highly differentiated nature of the health care industry imposes an aspirational element into the procurement of health care services and highlights, as suggested by Maslow (1970) that prestige needs can motivate individuals after belonging needs are fully satisfied. To illustrate, health care facilities range from free clinics for the destitute to exclusive, high priced medical facilities which cater specifically to persons who use their choice of medical services as an indication of their wealth and status in society. In fact, admission to a public hospital is often an indication that wealthy individuals may be experiencing financial challenges. Though hypothesising about health maintenance and illness in the context of self-actualisation would seem to be an oxymoron, the move away from dependence on traditional health care to self-care and self-healing through lifestyle measures such as prayer, veganism and naturopathy can be viewed as having acquired a self-actualised state.

7 Bill prioritisation and bill payment orientation Similarity between healthcare and service bill payments Like health care, the payment of monthly service obligations is a well-defined socio-economic activity where consumers may be required to undertake cost benefit analysis and need rationalisation, despite having consumption-related aspirations and ideals. For example, even bottom of the pyramid (BOP) (Prahalad, 2005) consumers may aspire to afford private school tuition for their children, but after mental calculation of the cost versus the immediate benefit, they will have no choice but to use their limited income to fulfil the more pressing physiological needs. 3.4 Study hypotheses Having sought to establish the plausibility of hedonism and utilitarianism (more specifically Maslow s hierarchy of needs framework) for hypothesising about the phenomenon of bill prioritisation by consumers, we now move to develop the study hypotheses. A key assumption in the development of said hypotheses is that utilitarianism and hedonism are conceptually opposite (Cardoso and Pinto, 2010; Batra and Ahtola, 1991; Dhar and Wertenbroch, 2005; Kivetz and Simonson, 2002). We therefore advance a series of contrasting hypotheses through utilitarianism (Maslow) in the first instance and hedonism in the second instance Physiological needs/bills Neuroscientific research concludes that the drive for physical survival is paramount in human beings (Gordon, 2000; Lieberman and Eisenberger, 2008). Maslow follows suit and proposes the pre-eminence of physiological needs. In reflecting on the framework, Thielke et al. (2012, p.475) notes that the motivation to acquire food, water and shelter is high and the behaviours that secure them are strongly reinforced. Bills to cover physiological needs would be those to maintain physical and mental normalcy such as the grocery bill, the water bill, the electricity bill, and the rent or the mortgage. Applying Maslow s utilitarian approach, it can be assumed that physiological needs/bills will be most important to consumers. This is reflected in Hypothesis 1a. H1a If consumers have a utilitarian approach to bill prioritisation, physiological bills will be most important. Given the supremacy of the survival drive, it is reasonable to assume that even if a consumer has a hedonic orientation to consumption and bill payment, physiological needs will still be given top priority. Hypothesis H1b therefore states: H1b If consumers have a hedonic approach to bill prioritisation, physiological bills will be most important Security bills Thielke et al. (2012, p.473) identify Maslow s security needs as those related to security of body, employment, resources, morality, family, health and property. The

8 8 J. Knight and D. Carrington corresponding monthly obligations in this case would be bills such as life and health insurances and pensions (Bartol and Martin, 1995). Traditional security obligations are somewhat unique in the sense that the rewards accrued from catering to them are long term and realised only when the consumer s security is threatened. In contrast, the rewards from meeting all of the other needs on Maslow s hierarchy are immediate. This lack of immediacy and the lack of pleasure derived from meeting security obligations render these needs the most functional/utilitarian of all. Nevertheless, security needs are not necessary for human survival and would not therefore supersede physiological needs in importance. Following this line of reasoning, it is hypothesised using Maslow s hierarchy that: H2a If consumers have a utilitarian approach to bill prioritisation, security bills will be second most important. The almost total absence of pleasure derived from meeting security needs will render them of lesser importance to the consumer who is oriented towards pleasure seeking. After basic survival needs are meet, it is expected that consumers who prioritises their needs for emotional or sensory gratification will rank belongingness (third level of Maslow s Hierarchy) and self-esteem needs (fourth level of the hierarchy) over security needs (second level), since these bring some measure of pleasure and emotional fulfilment to the individual (Kahneman et al., 2004). Monthly bills/subscriptions classified under belongingness needs would include those that permit consumers to form and maintain relationships, and be entertained in a comfortable, reassuring home environment. In our study, these bills included the telephone bill, the cell-phone bill and the internet bill. Self-esteem bills included cable television subscriptions (public television is free in Barbados) credit card bills and private school fees (Dwivedi et al., 2009; Venkatesh and Brown, 2001). In this developing country environment, the restrictions placed on getting a credit card and the high cost of cable television is responsible for the classification as prestige or self-esteem bills (White 2007; World Bank, 2015). Lower income Caribbean households may only be able to afford cable television if they are willing to make economic sacrifices (Straubhaar, 2007). The prestige of cable television also resides in its symbolism. The 100% foreign content allows individuals to vicariously enter into the lifestyles of consumers in the developed world (Knight, 2013). It is well established that Caribbean people place great value and prestige on goods and services that come from developed countries such as the US and Britain (Richardson, 1989; Naipaul, 1967; Knight, 2013). Summarising the foregoing assertions, Hypothesis 2b proposes that: H2b If consumers have a hedonic approach to bill prioritisation, security needs will be less important than belongingness and esteem needs Belongingness and self esteem needs Though the literature on hedonism and hedonic buying behaviour does not make a distinction between belongingness needs and esteem needs, Maslow permits such a distinction which can be reflected in our hypotheses. Hypothesis 3 and hypothesis 4 therefore state: H3 If consumers have a utilitarian approach to bill prioritisation, belongingness bills will be third most important.

9 Bill prioritisation and bill payment orientation 9 H4 If consumers have a utilitarian approach to bill prioritisation, self-esteem bills will be fourth most important Caveats in hypothesis development There are two main caveats associated with use of Maslow s framework in this study s context. First of all, none of the hypotheses are centred on the need for self-actualisation. Self-actualisation is a subjective phenomenon, and any bill from the previous levels could be classified on this top rung if it meshes with the goals and ideals of the consumer. In studying how consumers adopt technologies that support them as they age, Thielke et al., (2012) also found themselves unable to develop hypotheses in the context of self-actualisation, despite successful consideration of the lower level needs. In light of the obvious subjectivity, no attempt was made to conceptualise bill prioritisation within the confines of self-actualisation. It is also important to note that the economic and cultural circumstances of any nation will influence what is classified as a belonging or self-esteem need in particular (Schultz, 2010). Whereas there is justification for classifying cable television as a prestige good in the developing country environment, it may be more practical to view it as a belonging need for developed country consumers since it reflects and reinforces their norms and value systems Service bill payment orientation and its demographics antecedents A new construct entitled SBPO is introduced in this study to explore how developing country consumers view paying bills in general. Failure to pay bills can result from either a negative bill payment orientation or reduced spending power due to harsh economic conditions or recessionary pressures. SBPO is not only relevant for service providers in lower income developing nations, but is equally meaningful for those in middle income developing countries, especially when recession becomes an economic reality. SBPO captures whether or not hedonic purchases such as clothing and entertainment are given precedence over bills and whether consumers pay bills on time in cash, rather than resorting to credit. The construct flows out of a search for the influence of modern-day materialism and hedonism (Shugan, 2006; Hausman, 2010; Salthe and Gausdel, 2014) on attitudes to paying bills. Moreover, investigating whether demographic factors impact on SBPO can provide useful segment-specific information to local and international service marketers as they craft default-reducing and profit maximisation strategies. Since SBPO is designed to capture whether there is a hedonic influence on bill payment activity, the remaining hypotheses will flow from past research into associations between various consumer demographics and hedonic buying behaviour Age The association between hedonism and age has been negative for the most part (Azizi and Evin, 2012; Robinson, 2013). Young persons are more exposed (whether intentionally or not) to arousing and exciting changes and events and tend to engage in risky behaviour as a consequence of heightened stimulation seeking and immature self-regulatory systems (Tyler and Schuller,1991; Roberts and Walton, 2006; Dhal, 2008; Somerville et al., 2011;

10 10 J. Knight and D. Carrington Bernheim et al., 2013). Not surprisingly, parents are often confronted with college age children who amass credit card debt making frivolous purchases (Lachance et al., 2006; Warwick and Mansfield, 2000). As persons age, there is a general tendency to reflect on youthful pleasure seeking and to come to the realisation that fulfilling hedonic drives may bring momentary happiness but no lasting satisfaction (Salthe and Gausel, 2014). Experience also enhances critical thinking and reflexive skills, thereby causing individuals to become more pragmatic and practical in their consumption behaviour (Zawadzki et al., 2012; Burke et al., 2001; Eubank et al., 2011). Following these assertions on the differences between older and younger consumers it is hypothesised that: H5 Younger consumers will display a significantly less positive SBPO than older consumers Income SBPO becomes less of a concern as consumer income increases, since the propensity for default on monthly obligations is lessened. Nevertheless, there is still the question as to whether higher income is associated with a more positive SBPO. Despite an exhaustive literature review, it proved difficult to find research which spoke to the direct relationship between hedonism or utilitarianism and income level. However, some consideration has been given to income level in the studies on consumer spending control (Ameriks et al., 2007) and compulsive and impulsive shopping behaviour (Rindfleisch et al., 1997). Higher income persons appear to have more of a long-run approach to saving and spending, since there is a greater focus on wealth accumulation. In Barbados, late payments and disconnections incur additional costs. Paying utility and other monthly bills on time and with cash (rather than credit) would therefore be the least expensive way to service these obligations, and would accrue greater wealth to the individual over time. Given that higher income individuals have been shown to be more interested in wealth accumulation, it can be hypothesised that higher income levels may also result in a more positive SBPO. Hypothesis 6 therefore proposes: H6 Higher income consumers will have a significantly more positive SBPO than lower income individuals Gender General value surveys give mixed results about the relationship between gender and hedonism (Mahoney et al., 1979; Richey et al., 2009). Consumer research suggests that hedonic shopping in females may be increasing, since marketers are creating additional avenues for women to shop an activity that they enjoy more than males. Women also tend to make more impulse purchases (Kruger and Byker, 2009; Coley and Burgess, 2003; Tifferet and Hernstein, 2012). Nevertheless, some caution must be taken in assuming that women will have a less positive SBPO since values research suggests that women tend to be stronger than men in their need for security, are more risk averse when it comes to finances, and would more dread the unwelcomed consequences of an unpaid electricity or water bill (Clancy and Dollinger, 1993; Lau and Wong, 1992; Tifferet and Hernstein, 2012).

11 Bill prioritisation and bill payment orientation 11 Assuming that the greater need for security in women may counteract the adoption of a hedonic orientation to bill payments, and given that men, though seemingly less focused on hedonic consumption motives, may also be less security oriented and willing to take more risks the following hypothesis is derived: H7 Men and women will exhibit similar levels of SBPO 4 Methods 4.1 Participants Data was collected through a self-administered survey from 230 participants living in a mix of lower, middle and upper income neighbourhoods in Barbados. Students in an undergraduate Marketing research class were engaged to administer the questionnaires in selected neighbourhoods as part of their coursework requirement. This arrangement allowed the student interviewers to be trained and to be more closely supervised in the field. The survey delivered a sample which proved a reasonable representation of the overall population, with the exception of the gender distribution which is skewed towards females. A look at the 2010 census data indicates that there is an approximately equal split between males and females in the general population (Barbados Statistical Service, 2013). The sample profile is given at Table 1. Table 1 Demographic profile of the sample Demographic factor Percentages Gender Male 40% (92) Female 57.8% (133) Age range % (72) % (89) Over % (65) Income range (monthly, net) 0 3, % (110) , % (80) Over 6, % (30) N = Measures In order to determine how monthly bills and subscriptions were prioritised, respondents were presented with 21 of the most typical bill payments in the developing country (Barbadian) environment, and asked to rate them in order of importance on a 5-point Likert scale from very important to not important at all. Participants were required to assume that they were individually responsible for paying all of the 21 bills. The respondents were also required to respond to the standard demographic questions.

12 12 J. Knight and D. Carrington Bill payment default can result from either harsh economic conditions and/or recessionary pressures or from a failure to prioritise needs over wants. Items were developed to capture both of these dimensions and bear similarity to those developed by Hogan et al. (2013) to measure credit card payment delinquency in college students. Principal components analysis (varimax rotation) was performed on the 10-item scale. Two factors with eigenvalues greater than 1 emerged. Factor 1 encapsulated SBPO and explained 30% of the variance. Factor 2 accounted for 20% of the variance and captured the influence of recessionary pressures on bill payment failure. The identification of non-significant items with low item to total correlations resulted in three of the ten items being eliminated from the two-factor model (Field, 2005). The final SBPO subscale (the first factor) comprised of 4 items with item to total correlations ranging from Pallant (2007) recommends that item to total correlations be > 0.3 to ensure that items are valid measures of the underlying construct. Additionally, factor loadings ranged from 0.67 to Guadagnoli and Velicer (1988) demonstrate that factors with four or more loadings greater 0. 6 are reliable, regardless of the sample size. The alpha co-efficient for this first factor was an acceptable 0.76 (Nunnally, 1978). The second factor, entitled Recessionary Pressures comprised of three items with acceptable item to total correlations and factor loadings ranging from 0.73 to 0.9 (see Table 2 for measurement model). The Cronbach alpha co-efficient for this second factor was Table 2 Measurement Statistics for service bill payment orientation and recessionary pressures Scale items Factor loadings Item to total correlations Co-efficient Alpha Service bill payment orientation (SBPO) factor 1 1 I hold back from paying bills even though I have the money 2 I put clothes and entertainment before the bills I use credit cards to pay bills sometimes I sometimes forget to pay the bills even though I have the money Recessionary pressures factor 2 1. I am finding it more difficult to pay bills in this recession 2. It is more difficult to get bills paid now than five years ago 3. I tend to pay some or all of my bills late every month Results To determine how the various bills and subscriptions were prioritised the means were analysed using repeated measures ANOVA. Table 3 presents the 21 bills in order of importance as reflected by the mean ratings. In addition, the table attempts a simplified

13 Bill prioritisation and bill payment orientation 13 presentation of significant differences between mean ratings by placing the bills into several tiers. Bills grouped together in any tier have statistically similar means, while the first bill in each tier has a mean that is significantly more important to consumers than the first bill in the subsequent tier. The tiers were named (e.g., Physiological I) according the types of bills which fell into them, with special emphasis on the first bill in each tier. The naming of the tiers was grounded in theoretical and empirical research on utilitarianism and on the Maslow framework (Acton and Malathum, 2000; Thielke et al., 2012; Dwivedi et al., 2009; Venkatesh and Brown, 2001; Dhar and Wertenbroch, 2005; Kivetz and Simonson, 2002). Table 3 Tier placement and bill prioritisation Tier I Physiological I (critical for survival) Mean rating on bill. Bill 1 = very important 5= not important at all Groceries Water Electricity Mortgage Rent p value for differences between the first bills II Physiological (not Cooking gas p critical for survival) Lunch money III Security House insurance p <.05 Car insurance Road use tax Life insurance Pension Car loan Nursery fees Telephone (landline) IV Belonging/comfort Hire purchase bills p <.05 Internet Cell phone Private school fees V Esteem I Credit cards p <.05 V Esteem II Cable television p Support for the Maslow framework Table 3 gives general support for the use of a utilitarian, rather than a hedonic approach to bill prioritisation, since physiological bills come first and security bills (insurances, pensions, etc.) are ranked before comfort/belonging and esteem bills. More specifically, Hypotheses 1a, 2a, 3 and 4 are supported since the pattern of bill prioritisation generally supports that specified by Maslow s hierarchy of needs, rather than by the theory of hedonism. Consequently, Hypotheses 1b and 2b were not supported.

14 14 J. Knight and D. Carrington Table 3 also suggests a greater definition of the needs hierarchy than suggested by Maslow himself. As can be seen there is a statistically significant difference between the mean rating for groceries and for cooking gas and lunch money. This led to the distinction being made between Physiological I bills and Physiological II bills, where the former are necessary for human survival and functioning, but not the latter. Though cooking gas and lunch money are important, they become secondary needs as long as groceries are available. The security bills occur as predicted by Maslow s hierarchy. Some of the non-obvious inclusions are the car loan, nursery fees and the telephone (landline) bill. On closer examination, the car loan could be considered security needs/bills given that access to car offers protection from having to walk lonely roads at night. Additionally, access to one s own transportation gives greater control over being early for work in order to maintain one s employment status. When it is considered that nurseries or child care facilities provide safe havens for the young children in the family, it becomes clearer why this particular bill fell into the security tier of the Maslow hierarchy. Though it was expected that the telephone (landline) would have fallen squarely into the belongingness tier, it fell at the bottom of the security tier. In the Barbadian context a landline can be considered as having a security element since unlimited calls are offered for a low fixed rate. The landline therefore proves to be a secure, inexpensive means of contacting an entire household, as compared to the more expensive cell phone services which allow you to reach only one individual. Hire purchase agreements which head the belongingness tier seem well placed given that Barbadians tend to use hire purchase agreements to secure furniture and appliances to make homes and surroundings more comfortable. It was expected that private school fees would fall into the esteem tier, given that primary education and secondary schooling are free to Barbadian citizens, and private school is an expensive undertaking. However, rather than falling squarely in one of the esteem tiers, private school tuition came to the bottom of the belongingness tier. A possible explanation for this is that some of the island s public secondary schools have become less stable as a consequence of drugs, bullying and sexual activity (Fenty, 2014) resulting in private schooling being seen as a necessity for making the lives of children more stable and comfortable. This importance rating for private school tuition certainly contradicts traditional anecdotes of private school being a distinguishing and esteeming mark of the rich in Caribbean societies. More importantly, its surprising inclusion in the belongingness tier, is not only indicative of a cultural shift but creates an opportunity for these service providers to develop more pointed messages and also to broaden their target base to include those persons now willing to afford it to provide a more comfortable and safe learning environment for their offspring. Credit cards are ranked below the security and belonging items in terms of importance, and categorised as Esteem (I). Unlike advanced societies where persons of all income ranges qualify for credit cards, and use them to pay for a broad range of goods and services, Barbadians tend not to use credit cards to fulfil day to day physiological needs nor periodic security needs (White, 2007; World Bank, 2015). Rather, credit cards are sought out to facilitate overseas vacation/shopping trips and to buy big ticket items like appliances. In essence, possession of a credit card amounts to somewhat of a status symbol for average Barbadians.

15 Bill prioritisation and bill payment orientation 15 Cable television is classified as Esteem II since its importance ranking is significantly lower than that of credit cards (Esteem I). The relatively high cost of cable television also makes it somewhat of a prestige service for Barbadians (Straubhaar, 2007). 5.2 SBPO and demographic factors H5 proposed that younger consumers would have a significantly less positive SBPO than older consumers. This was not supported [F (9,216) = 1.292; p =.242]. Both young and old consumers demonstrated the same amount of positivity towards paying bills. There was also no relationship between income level and SBPO, rendering no support for H6 [F (10,209) = 0.890; p =.543]. H7 proposed that men and women would be similar in their SBPO and this was supported (t =.972; df = 223; p = 0.332). In light of the homogeneity of the Barbadian population across the three key demographic variables of gender, age and income, the overall SBPO for the sample was calculated. The mean was 4.08 (σ = 0.9) indicating strong disagreement with a hedonistic approach to SBPO by Barbadian consumers. Otherwise said, Barbadians seek to pay their bills on time and in cash and to put their monthly obligations before hedonic purchases. It was not surprising therefore that Barbadians exhibited strong agreement on factor 2 which spoke to having reduced spending power due to recessionary pressures (mean = 2.83, σ = 1.12 on a 5-point Likert scale where 1 represented strong agreement and 5 strong disagreement). The similarity in SBPO across the various demographic groups and the indication that recessionary pressures are being felt would suggest that money related attitudes are grounded in cultural norms and values which override demographic variations. Very little has been researched on the national culture of Barbados and the other countries of the Caribbean. However, a comprehensive study of the four Caribbean islands of Barbados, Jamaica, St. Vincent and Trinidad and Tobago showed that the most prominent cultural characteristics of all four are strong risk aversion and uncertainty avoidance (Punnett et al., 2006). Indeed, this strong risk aversion may influence the very positive SBPO witnessed in this study. If this line of reasoning is extended to consider the US, the seeming irrationality being witnessed in the buying behaviour of these consumers (Shugan, 2006) may very well be as a result of a national culture which supports low uncertainty avoidance and risk taking (Meng and Nasco, 2009; Meng, 2011). It would be of interest in future research to measure the SBPO of US consumers, and consumers in other countries with low uncertainty avoidance to determine whether the hedonism witnessed in their mainstream buying behaviour influences bill payment activity. 6 Discussion The study indicated that consumers generally take a utilitarian approach to bill prioritisation and closely follow the Maslow s Hierarchy of Needs framework in ranking their monthly bills. Implied herein is the salience of rationality in the consumer decision making process. These findings stand in contrast to the suggestion, coming largely from

16 16 J. Knight and D. Carrington studies of developed economies that consumers are becoming more hedonic and escapist in their buying, especially in recessionary times, and may be placing esteem and belongingness needs and obligations over security needs. This study would have to be replicated elsewhere to determine whether rationality in bill prioritisation is a general rule. Nevertheless, it is expected that these rankings could inform the strategies of service providers in other middle-income developing countries of similar culture and level of economic development, as are the remaining territories of the English-speaking Caribbean (UNDP, 2015). The research findings point to a need for greater understanding of how consumers mentally compartmentalise products and services into those where pleasure seeking may be allowed and those where it is not. In other words, it proves necessary to investigate why consumers may adopt a rational, survivalist approach to bill prioritisation though they may be exhibiting very irrational product purchase decisions when buying items such as clothing and vehicles. Though security bills (insurances, pensions) were rated of significantly greater importance than belongingness and esteem related obligations, Barbados has experienced a specific problem of increased levels of default on insurances and pensions since the economic recession escalated around This suggests that the default on security obligations may be due to the lack of immediacy of the repercussions, rather than a failure to see the relative importance. By moving away from the singular emphasis in services marketing literature on credit card delinquency to ranking various subscriptions and services, the study provides useful information to service marketers seeking to know their relative importance. The ranking can also drive efforts to reposition various service offerings in order to influence the importance rankings. For example, cable and wireless (FLOW) Telecommunications provides both a landline and a mobile phone service to Barbadians with the latter being more profitable since it costs the consumer more; yet the study s findings indicate that the landline is slightly more important to consumers than the mobile service. Knowledge of this information could guide promotion efforts aimed at raising the profile of the mobile service, so as to further enhance the overall profitability for FLOW. There is also room to upwardly adjust the pricing of the landline service (now fixed) given its importance to consumers. The paper introduced the concept of SBPO, and suggests that this may be more heavily influenced by national culture than by demographic characteristics. This needs to be verified by further research across different cultural domains. Future research could also explore the potential influence of disruptive and life changing events such as divorce on SBPO, since past research has shown that divorce results in declining income, reduced access to credit and increased default on debt repayments (Zagorsky, 2005; Lyons and Fisher, 2006). The research findings support the relevance of Maslow s hierarchy of needs theory in a very important aspect of services marketing. Consumer research has over the years shied away from testing the validity of this framework, thereby causing its inclusion in practically every contemporary consumer behaviour text to be subject to question. Credence for its inclusion is provided by this paper. More importantly, these findings point to the need to subject inherently intuitive frameworks to more empirical analysis.