Shoppers buy extended warranties for products they love: study
Last Updated: Tuesday, June 16, 2009 | 11:33 AM ET
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Consumers are more likely to buy extended warranties for products they consider fun, rather than utilitarian, according to new research.
A group of American researchers used purchase information from the electronics department of a retail chain to figure out who buys extended warranties and why. Their research will be published this month in the Journal of Consumer Research.
They found that when people bought "fun" things such as game controllers or iPods, they were more likely to buy an extended service contract than if they bought something utilitarian, such as a printer.
"Consumers' valuation of hedonic products is higher which increases the pain of loss," write authors Tao Chen of the University of Maryland, Ajay Kalra of Rice University, and Baohong Sun of Carnegie Mellon University.
They also found low-income consumers are more likely than wealthier consumers to buy the extended warranties because they know they can't afford to replace an item should it break.
The Consumers Union, publishers of the magazine Consumer Reports, has previously urged shoppers not to buy extended warranties on electronics and appliances.
After testing various products, the Consumers Union found most don't malfunction or break within the extended warranty period but even when they do, repair fees normally cost about the same as the extended warranty.
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