To switch or not to switch: Investigating the role habit and inertia plays in consumer decision making within the New Zealand Electricity Sector.

Abstract

This thesis has responded to one of the research priorities for 2014 to 2016, outlined in the Marketing Science Institute, “What role does habit and inertia play in consumer decision making?” Extensive research has been conducted on both habit and inertia separately, but little research has been conducted of these topics collectively. However, an extensive literature review was conducted on both phenomena in order to gain a comprehensive understanding of habit and inertia, and the role each play in consumer decision making (CDM). One key finding of habit regarding CDM is that a habit is goal orientated, automatic and can occur in numerous contexts. One key finding of inertia within CDM is that it is influenced by a market and by consumers themselves, respectively. Therefore, this thesis has focused on both elements, referring to them as market-influenced inertia (MII) and self-imposed inertia (SII). Both have switching barriers which also play a critical role in CDM. For example, MII: switching costs, availability and attractiveness of alternatives, and service recovery; SII: choice overload, trust, and satisfaction (Yanamandram and White, 2006). In addition, widespread research has been conducted on consumer switching within the electricity markets of the Northern hemisphere, but there has been little or no research conducted in New Zealand. Therefore, this thesis has responded to the research gap by applying the above research question to the New Zealand electricity sector. Scale measures were developed for habit, market-influenced inertia, and self-influenced inertia in order to answer this research priority. Keywords: market-influenced inertia, self-influenced inertia, switching costs, and choice overload.