Planned Obsolescence in Continuous Innovations

Planned Obsolescence in
Continuous Innovations:
An Experiment on Consumers’ Evaluation
A dissertation submitted to The University of Manchester for the degree of

Master of Science in the Faculty of Humanities
2015
Ho Yi KAM
Manchester Business School

LIST OF CONTENTS

LIST OF TABLES ............................................................................................................................. 4
LIST OF FIGURES ........................................................................................................................... 5
ABSTRACT ................................................................................................................................... 6
DECLARATION .............................................................................................................................. 7
INTELLECTUAL PROPERTY STATEMENT .................................................................................................. 7
PREFACE..................................................................................................................................... 8
ACKNOWLEDGEMENT ..................................................................................................................... 8
1 INTRODUCTION .......................................................................................................................... 9
1.1 Planned Obsolescence in Our Life ...................................................................................... 9
1.2 Growing E-waste ................................................................................................................ 11
1.3 Responsible Innovations .................................................................................................. 12
1.4 Trend on Sustainable Consumption ................................................................................. 13
1.5 Purpose of Research .......................................................................................................... 13
1.6 Focus on Planned Obsolescence in Smartphones ............................................................. 14
1.7 Values of Current Research ............................................................................................... 14
1.8 Research Outline ............................................................................................................... 15
1.9 Research Questions ........................................................................................................... 15
2 LITERATURE REVIEW .................................................................................................................. 16
2.1 What is Planned Obsolescence? ....................................................................................... 16
2.1.1 Kinds of Planned Obsolescence ............................................................................................. 16
2.2 Why does Planned Obsolescence Occur? .......................................................................... 18
2.2.1 Time Inconsistency ................................................................................................................... 18
2.2.2 Different Discount Rates between Owners and Producers ............................................... 18
2.2.3 Network Externalities .............................................................................................................. 19
2.2.4 Antitrust Policy ......................................................................................................................... 19
2.3 Demerits of Planned Obsolescence .................................................................................. 20
2.3.1 Parkard’s Classic Complaint ................................................................................................... 20
2.3.2 Waste Generation is Not Sustainable ................................................................................... 20
2.4 Optimal Durability ............................................................................................................ 21
2.4.1 Purchasing Durable Goods as an Investment Decision ..................................................... 21
2.4.2 Social Cost is Not Internalized ............................................................................................... 23
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2.4.3 Optimal Durability may be Independent of Market Structure ......................................... 25
2.5 Focus on Competitive Markets rather than Monopolistic ................................................. 26
2.6 Secondary Market ............................................................................................................. 27
2.6.1 Information Asymmetry .......................................................................................................... 27
2.7 Characteristics of Continuous Innovation ......................................................................... 28
2.7.1 Continuity and Incremental Innovation ............................................................................... 28
2.8 Merits of Planned Obsolescence in Continuous Innovations ........................................... 30
2.8.1 Planned Obsolescence is Necessary for Technological Advancement ............................ 30
2.8.2 Planned Obsolescence Improves Product Quality in Other Dimensions ....................... 30
2.8.3 Planned Obsolescence Captures Values from Both Adoptors and Repeaters ............... 31
2.8.4 Replacement is Necessary for Improvements ..................................................................... 32
2.8.5 System Change is Slow if Things are Too Durable .............................................................. 32
2.9 Guiltinan’s Call for Contributions ..................................................................................... 33
3 RESEARCH DESIGN ................................................................................................................... 34
3.1 Exploratory Research ......................................................................................................... 34
3.2 Descriptive Research ......................................................................................................... 34
3.2.1 Purpose ...................................................................................................................................... 34
3.2.2 Sampling ................................................................................................................................... 35
3.2.3 Instrumentation ....................................................................................................................... 36
3.2.4 Data Collection .......................................................................................................................... 36
3.2.5 Data Analysis ............................................................................................................................. 36
3.3 Causal Research ................................................................................................................ 37
3.3.1 Purpose ...................................................................................................................................... 37
3.3.2 Sampling & Data Collection .................................................................................................... 37
3.3.3 Pilot Test .................................................................................................................................... 37
3.3.4 Brief Overview of Procedure ................................................................................................... 38
3.3.5 Independent Variables (IV) – Information Content ............................................................ 40
3.3.6 Dependent Variable (DV) – Responses to Information ...................................................... 44
3.3.7 Data Analysis ............................................................................................................................. 48
4 FINDINGS AND INTERPRETATIONS .................................................................................................. 49
4.1 Exploratory Research Findings and Interpretations ......................................................... 49
4.1.1 Substantial Waste Generation ............................................................................................... 49
4.1.2 Manufacturers’ and Consumers’ Responsibility ................................................................. 49
4.1.3 Repair and Updates are Important ........................................................................................ 50
4.1.4 Reuse Possibility is High ........................................................................................................ 50
4.2 Descriptive Research and Causal Research Sample Demographics .................................. 51
4.3 Descriptive Research Findings and Interpretations .......................................................... 52
4.3.1 Consumers’ Need for Smartphone Novelty is Relatively Small ....................................... 52
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4.3.2 Continued Software Support and Repairability are Highly Valued ................................ 53
4.3.3 Most do not Resell Gadgets and Almost All Prefers Owning than Renting ................... 54
4.3.4 Manufacturers and Consumers Both Considered Responsible for E-Waste Impact ..... 55
4.3.5 E-Waste Considered a More Important Issue in Developed Countries than in
Developing Countries ........................................................................................................................ 56
4.4 Causal Research Findings and Interpretations ................................................................. 57
4.4.1 Effect on Desirability (DV1: Attitude) .................................................................................... 58
4.4.2 Effect on Willingness to Pay (DV2: Values) .......................................................................... 61
4.4.3 Effect on Anticipated Years of Use (DV3: Behaviour) ......................................................... 63
5 DISCUSSION ........................................................................................................................... 65
5.1 Consumers Recognize Planned Obsolescence as Undesirable ......................................... 65
5.2 Consumers More Value Social Loss than Their Own Loss ................................................. 65
5.3 More Information Does Not Render Greater Influence ..................................................... 66
5.4 Way Forward: Creating Consumer Pressure ..................................................................... 66
5.5 Limitations ........................................................................................................................ 67
5.6 Strengths ........................................................................................................................... 68
6 CONCLUSION .......................................................................................................................... 69
REFERENCES .............................................................................................................................. 71
APPENDICES .............................................................................................................................. 75
Appendix 1: Full Qualtrics Survey ........................................................................................... 75
Appendix 2: Data Sets for Causal Research ............................................................................. 85

Word count: 14376 words
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LIST OF TABLES
Table 1: The ten statements presented to respondents. ....................................................36
Table 2: Consumer focus information content presented to respondents. ....................... 41
Table 3: Social focus information content presented to respondents. ..............................42
Table 4: Commercial focus information content presented to respondents. ....................43
Table 5: Demographics of the Sample ................................................................................ 51
Table 6: Response counts for each subset. ......................................................................... 57
Table 7: Results showing the effect of information content on desirability of the new
smartphone .................................................................................................................58
Table 8: Results showing the effect of information content on willingness to pay ........... 61
Table 9: Results showing the effect of information content on anticipated years of use of
the new smartphone ...................................................................................................63

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LIST OF FIGURES
Figure 1: Optimal durability (Cameron, 2015) ........................................................................................ 22
Figure 2: New marginal cost of increasing durability ......................................................................... 23
Figure 3: Diminishing social cost towards higher durability ........................................................... 24
Figure 4: Technological progress of a continuous innovation (Volti, 1998) ............................ 29
Figure 5: Flow of the causal experiment .................................................................................................... 38
Figure 6: Respondents are presented with a new smartphone ...................................................... 39
Figure 7: Question asking on desirability of the new phone ............................................................ 45
Figure 8: Question asking for re-rating desirability ............................................................................. 45
Figure 9: Question asking on their willingness to pay for the new phone ................................ 46
Figure 10: Question asking on respondents' anticipation on the new phone's service life
.............................................................................................................................................................................. 47
Figure 11: Bar chart showing consumers' need for novelty .............................................................. 52
Figure 12: Bar chart showing consumers’ need for aftersales support ....................................... 53
Figure 13: Bar chart showing consumers' resell and owning preferences ................................ 54
Figure 14: Bar chart showing consumers' view on responsibilities .............................................. 55
Figure 15: Bar chart showing consumers' view on e-waste issues ................................................ 56
Figure 16: A boxplot showing the effect of different information content on respondents'
desirability of a new smartphone ........................................................................................................ 59
willingness to pay ........................................................................................................................................ 62
anticipated years of use of a new smartphone .............................................................................. 64
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ABSTRACT
Past literature on planned obsolescence mainly discussed the durability choice of
monopolies who produced durable goods. There were many examples of manufacturer
tactics that deliberately shortened products’ service life in order to stimulate sales and
drive consumption. This drew a lot of criticism from consumers’ perspective. In this
technology era, there are many products that experience fast and incremental
improvements in terms of product functionality, for example, computers and mobile
phones. While planned obsolescence remains a popular tactics among manufacturers,
consumers seem to complain less, as durability becomes a less important product
attribute in these continuous innovations. However, planned obsolescence creates social
and environmental impacts as well, which consumers may not be aware of. This research
aims to find out if consumers recognize planned obsolescence in smartphones, where
there are continuous innovations, as undesirable too. An online experiment that involved
109 respondents from the U.K. and Hong Kong was employed as a pilot research. It
aimed to study consumers’ attitude, values and behavioural change after educating them
of the relevant planned obsolescence practices in smartphones. Different information
foci were also tested and compared on their relative impact on consumers’ evaluations.
Results suggest that, consumers generally showed decreased attitude and values towards
smartphone after being educated. By using information that focused on social loss
created by planned obsolescence, consumers showed the greatest decrease on attitude
and values. It is suggested that pro-environmental parties may make use of the findings
to create consumer pressure that discourages the overuse of planned obsolescence
practices among the electronics industry.
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DECLARATION
No portion of the work referred to in the dissertation has been submitted in support of
an application for another degree or qualification of this or any other university or other
institute of learning.
INTELLECTUAL PROPERTY STATEMENT

1) Copyright in text of this dissertation rests with the author. Copies (by any
process) either in full, or of extracts, may be made only in accordance with
instructions given by the author. Details may be obtained from your Programme
Administrator. This page must form part of any such copies made. Further
copies (by any process) of copies made in accordance with such instructions may
not be made without the permission (in writing) of the author.
2) The ownership of any intellectual property rights which may be described in this
dissertation is vested in the University of Manchester, subject to any prior
agreement to the contrary, and may not be made available for use by third
parties without the written permission of the University, which will prescribe the
terms and conditions of any such agreement.
3) Further information on the conditions under which disclosures and exploitation

may take place is available from the Academic Dean of Manchester Business
School.
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PREFACE
This dissertation topic was inspired by the module ‘Innovation and Market Strategy’
given by Dr. Hugh Cameron. Having graduated from a Bachelor degree in Marketing and
Management, I hope to contribute more understanding to innovations by employing
previously learnt techniques in marketing research and thus devised this experiment. It
is hoped that this dissertation will provide insights for marketers who are concerned
with environmental and social impact associated with planned obsolescence.
ACKNOWLEDGEMENT
I take this opportunity to express my gratitude to my supervisor, Dr. Hugh Cameron for
his patient guidance on the subject matter – planned obsolescence. I also thank every
one who participated in the survey and experiment. I place on record my sincere thank
you to anyone who directly and indirectly advised me on this dissertation.

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1 INTRODUCTION
1.1 Planned Obsolescence in Our Life
We all have the experience of replacing consumer products. We buy new smartphones
because there are functional upgrades. We buy new hairdryers because it is more
efficient to buy a new one than to repair a broken one. We are tempted to buy new
clothes because fashion changes every period. We buy new laptops because every one of
our classmates is using it. We keep buying things that are not absolutely required.
Some companies learnt these consumer behaviours and speed up the replacement cycle
by intentionally shortening products’ service life, through tactics in technological,
economic or psychological ways. Such a practice is called ‘planned obsolescence’, and is a
powerful tool to stimulate continuous sales. It is especially common in technological
goods, such as cars, washing machines and mobile phones, but also exist in non-
technological goods such as furniture and clothes.
Is planned obsolescence bad from consumers’ perspective? It is obviously bad for most
products as nobody would desire a chair that breaks in two years, or a hairdryer that
burns out every six months. I do not mind having the same chair and same hairdryer for
ten years as long as it still functions well and there is no serious fashion problems.
But there is a conflict in one kind of product, which is technological good, where
innovation improvements continuously take place. Bass and Bass (2001)’s call it ‘fast-
tech’ products and they accurately described this phenomenon:
‘Fast-tech’ products as the thousands of product categories that improve so

rapidly that customers want a newer version long before the older one wears out
or ceases to be capable of fulfilling previously defined needs (Bass and Bass,
2001).
Who would want to use a smartphone for ten years, while there are many more
technologically advanced smartphones on the market? These new smartphones function
better, and have been costing less and less in recent years. Moreover, new smartphones
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make people look good and up-to-date. There are just so many reasons to justify
replacing your smartphone once in a while, so people could enjoy the result of
technological advancement. These arguments somehow support the values of planned
obsolescence.
If most of us only use one smartphone at any particular time, whenever we replace a
smartphone, the old one will either be idle in a drawer or discarded. These discards
create enormous electronic wastes, which cause social, environmental and ethical
problems.
Several questions arise. Is it socially desirable to put an expiry date on smartphone, as

well as other products with ongoing innovative improvements? Or more explicitly, is it
ethical and socially responsible to put an expiry date on these items?
These questions on planned obsolescence are unclear that they deserve more dedicated
study in this area where ongoing innovation takes place. The following will discuss them
more in detail.

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1.2 Growing E-waste
When it comes to electronic products, one of the growing concerns has been electronic
waste (e-waste). By shortening the service life of electronic products, it produces a lot of
e-waste, as these electronic items keep being replaced and discarded. E-waste ‘is a term
used to cover all items of electrical and electronic equipment and its parts that have been
discarded by its owner as waste without the intent of re-use’ (Baldé et al., 2014). Britain
was the seventh largest e-waste producer in the world and every citizen on average
discards 21kg of e-waste in a year (The Guardian, 2013). While in Europe as a whole, the
average was 12kg per inhabitant (Baldé, Wang, Kuehr, & Huisman, 2014).
Particular attention is given to small IT, which took up 7.2% of global e-waste production
by weight in 2014. This small IT category comprises of mobile phones, personal
computers, printers, calculators etc. Although it is relatively low in weight composition,
lighter items such as laptops contain high concentrations of heavy metals and flame-
retardants (Robinson, 2009). In contrast, Robinson mentioned that larger items such as
refrigerator and washing machines contained mostly steel. Therefore, in terms of
environmental impact, the contribution by small IT is not trivial.
E-waste causes health problems too. Examples are impaired mental development, lung
damages (due to carcinogens release into the air), liver and kidney damage (Baldé et al.,
2014). But E-waste contains valuable components such as Copper, therefore it reflects an
opportunity for developing countries to extract them. This poses threats on the health of
citizens in these developing countries, where e-waste is transported to as well as citizens
living in the local area, where e-waste is consumed and discarded.
It is not sustainable as these extra consumptions are sacrificing the well being of other
people and the environment (Cooper, 2005). It is also uneconomical for consumers to
discard functional products.

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1.3 Responsible Innovations
Having learnt the social, environmental and ethical issues associated with e-waste, it
comes to cutting down e-waste from its source: production. Apparently, manufacturing
firms have the power to control the service life of an electronic product. Should they be
held responsible?
This is where the term responsible research and innovation (RRI) comes in. RRI is
defined as:
a transparent, interactive process by which societal actors and innovators become

mutually responsive to each other with a view to the ethical acceptability,
sustainability and societal desirability of the innovation process and its
marketable products (von Schomberg, 2011).
Planned obsolescence is an example of irresponsible innovations in a broader context.

The idea of RRI exists to deal with the problems, which are essentially the direct result
from technological innovations themselves (Stahl et. al, 2014). So there are likely side
effects and responsibilities in product area wherever innovation takes place. Examples
are global warming, waste production, pollutions and many more. Any innovation
ignoring these impacts is considered as an irresponsible innovation.
These responsibilities can be taken into consideration as early as in the research stages.
For a research to be worth developing, apart from financial and corporate objectives, the
sustainability of outcome and social desirability should also be accounted (Stahl et. al,
2014). Therefore, the use of planned obsolescence without due consideration on the well
being of the society and the environment is irresponsible.
Stahl (2014) also mentioned that it is especially of a concern in the area of information
and communication technology (ICT), which is marked by fast innovation and its
diffusive and persuasive nature. These characteristics magnify the undesirable impact of
innovations, thus understanding the responsibilities in ICT area is urgent and important.
Therefore, the answer to whether it is ethical and socially responsible to practice planned
obsolescence in innovating products depends on the extent of planned obsolescence
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adopted. Overusing planned obsolescence is clearly unethical and social irresponsible. It
is high time manufacturers reduce planned obsolescence practices and devise alternative
ways to generate profits. For example, they may implement recycling and reuse
programmes and adopt modular designs. This current research focuses on the first step:
reducing planned obsolescence practice.
1.4 Trend on Sustainable Consumption

It is said that business firms have an important role in promoting sustainability
(Michaelis, 2003). One way to become sustainable is by achieving eco-efficiency (Cooper
2005), which is defined by satisfying customers’ needs at a competitive price, while
reducing environmental impact and resource intensity to a point that is within Earth’s
capacity of carrying. The practice of planned obsolescence is evidently opposite to
achieving eco-efficiency. To remedy the situation, consumption patterns has to be
changed as a first step towards sustainable consumption, as suggested by scientist
(Myers, 2001).

1.5 Purpose of Research

This research places emphasis on consumers. It is evidently undesirable to practice
planned obsolescence in durables where there is little innovation, e.g., hairdryers and
chairs. But the answer is not so obvious in products with continuous innovation. Do
consumers desire longevity in these items or are they indifferent to longevity instead? If
they had learnt the devastating impact planned obsolescence could create, would they
change their mind? If they do recognize planned obsolescence as a bad practice, it is
suggested that consumer pressure can be created accordingly to discourage firms from
overusing planned obsolescence.
Consumer pressure is reflected in ethical purchase behaviour and it works in a way that
business firms are socially controlled through market and consumer sovereignty (Smith,
1958). In any non-monopolistic market, consumers may often exercise their sovereignty
by not buying from a non-ethical firm and buy from its competitors.
13
This research serves as a pilot study to empirically find out if consumers recognize
planned obsolescence as an undesired practice and find out what information would
cause them to think so. It uses an experimental approach to find out what information
content, as the very factor, to educate consumers on planned obsolescence would make
consumers most recognize planned obsolescence as undesirable. In this way, consumer
pressure can be created accordingly. The effectiveness of such pressure is measured by
consumers’ attitudes, values and behaviour towards particular electronic goods.
This paper is also in response to Guiltinan’s (2009) call for more understanding on what
information content to communicate to consumers so that they are well informed of
product choices. Only by enabling consumers’ fully informed choices can they exercise
their sovereignty and pressure electronic goods manufacturers for more responsible and
ethical practices.

1.6 Focus on Planned Obsolescence in Smartphones

In this pilot research, it is necessary to narrow down the product scope to produce
defined and convincing findings. Having discussed the pressing need to discourage
irresponsible innovations in ICT industry, this research focuses on a typical and very
popular ICT product: smartphone. Moreover, there have been some practices of planned
obsolescence on smartphones being reported on news. If smartphone producers could
design smartphones of longer service life, it can reduce e-waste and promote
sustainability.
1.7 Values of Current Research

It is hoped that pro-environmentalists or governments can make use of the findings to
devise appropriate and effective messages to create sufficient consumer pressure to
discourage electronics firms from overusing planned obsolescence. As planned
obsolescence is one example of irresponsible innovation practices, it is hoped that
findings could also provide insights to studying other irresponsible innovation practices
as well as other electronic goods, such as personal laptops and tablets.
14
It is also especially of value to planned obsolescence in an area where rapid and
continuous innovation takes place, as related literature on planned obsolescence rarely
discussed ICT products.
1.8 Research Outline

In this paper, I first survey and review the most influential literature related to planned
obsolescence and durability of products to present a thorough understanding of the
issue. The latter part of the literature review will also discuss continuous innovation, as it
is the main subject studied in this research.
Then, the research designs are explained. There are three research stages: exploratory,
descriptive and causal researches. Descriptive research builds on the findings from
exploratory research stage. The causal research is to study the causal impact of
information content on consumers’ response to planned obsolescence.
After that, findings and interpretations at each stage are demonstrated.
Lastly I discuss the strengths, limitations of the current research and contributions to
further study.

1.9 Research Questions

1) Do consumers recognize planned obsolescence as an undesirable practice in
product category where there is continuous innovation? Do they desire longevity
in these products?
2) If so, by educating consumers of planned obsolescence:
a) What information content causes the most decrease on consumers’
desirability of a new smartphone (attitude)?
b) What information content causes the most decrease on consumers’
willingness to pay for a new smartphone (value)?
c) What information content causes the most increase on consumers’
anticipated years of use of a new smartphone (behaviour)?
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2 LITERATURE REVIEW
2.1 What is Planned Obsolescence?
Consumption kept increasing in the United States in the 60s. Vance Parkard (1960)
investigated this phenomenon of increasing consumption after the Second World War
and uncovered the reasons behind it. Some marketing experts at that time claimed that if
consumption did not keep increasing, the economy would become stagnant. As
production ability expanded, it was also essential to drive up personal consumptions in
order to keep pace with production. It appeared to be a widely held belief among the
industries so that one foremost goal of them at that time was to stimulate new desires
and new wants from customers. To achieve this, marketers were to devise ‘strategies’
that induced customers to keep consuming more.
One of these strategies was planned obsolescence, which was used to ‘influence either the
shape of the product or the mental attitude of the consumers represents the quintessence
of the throwaway spirit (Parkard, 1960).’
2.1.1 Kinds of Planned Obsolescence

There have been many kinds of obsolescence defined by scholars. It is generally defined
that there are two broad kinds of obsolescence - absolute and relative obsolescence.
Absolute obsolescence refers to product failure or breakdown, which is mostly
manufacturers’ liability. On the other hand, relative obsolescence is based on consumers’
evaluation and perception. It usually happens when one compares an existing product to
a new product. In this paper, planned obsolescence is mostly referred to relative
obsolescence.
Tim Cooper (2004) proposed three categories of relative obsolescence, which are
psychological, economic and technological. Psychological obsolescence happens when
the product is no longer desired or attractive to consumers. Economic obsolescence
means from a financial point perspective, cost of acquiring a new one is cheaper than
holding on to the existing one that needs repairing. Last, technological obsolescence
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means when new products out outperform old ones in terms of functions. Any one of this
obsolescence, with a firm’s motive of shortening their service life is termed ‘planned
obsolescence’.
Parkard (1960) noted that obsolescence of function (i.e. technological obsolescence) is

often desirable and consumers all appreciate when a new technology outperforms a
previous one. However, the ethics of using psychological and absolute obsolescence are
debatable.

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2.2 Why does Planned Obsolescence Occur?
The earliest literature believed that planned obsolescence was a business practice
adopted by monopoly firms. Hence, monopoly power was one of the major sources.
Below are several possible reasons causing it.

2.2.1 Time Inconsistency

The problem of time inconsistency was first introduced by Coase (1972), and has
remained the most popular reasons cited by scholars to date. Time inconsistency
prevents monopoly firms from selling their products at a monopolistic high price and
generating continuous sales over time. In a monopoly durable good market where
demand is price elastic, the price set in the first period can only capture the market with
higher willingness to pay. In the second period, the firm must lower the price in order to
sell to people with lower willingness to pay. As a result, the monopoly price drops. In
other words, a monopoly durable good supplier does not have real monopoly power if
customers can expect a price drop in the next period and thus withhold purchase at
present. To overcome this problem, reduced durability was said to be one of the business
practices that monopoly might use.
A follow-up popular study by Bulow (1986) suggested that monopoly had an incentive to
produce goods that had uneconomically short useful lives because of the commitment
problem, which was similar to the time inconsistency described by Coase.
It was noted here that durability is only one part that constituted planned obsolescence
(Bulow, 1986) and other factors such as compatibility with previous generation and the
frequency of new product introduction may also contribute to planned obsolescence.
Therefore, the discussion on planned obsolescence solely from the perspective of
durability may not be sufficient.

2.2.2 Different Discount Rates between Owners and Producers

Consumers and producers have different discount rates. When a perfect capital market
does not exist, i.e. discount rate of owners of durables does not equal to discount rate of
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producer, firms have incentive to practice planned obsolescence (Barro, 1972). If
discount rate of owners is greater than producers, owners are more sensitive to price
change rather than durability change. It is beneficial for firms to maximize profits
through reducing durability rather than raising price so that consumers are less aware of
the changes.
2.2.3 Network Externalities

Waldman (1993) also demonstrated that in monopoly market where there is network
externality for products that they sell, there is incentive for the monopoly to switch to a
competing, non-compatible standard in the second period. In this way, they earn more
profits since some of the consumers who purchased in period 1 has to repurchase in
period 2. In other words, the previous standard sold in period 1 becomes obsolete, as the
standard changes. This is also one kind of planned obsolescence.
2.2.4 Antitrust Policy

Waldman (1993) also mentioned that prohibition of leasing of durable goods by
monopoly in some countries might be a driver for planned obsolescence. The original
purpose of this policy is to prevent firms from abusing monopoly power. But since the
policy forces the monopoly to sell but not lease, the monopoly faces the abovementioned
time inconsistency problem. In order to overcome this, they have to reduce product
durability as a result.
However, as Coase (1972), Bulow (1986) and Waldman (1993) demonstrated, rental
solution could solve the time inconsistency problems. By renting rather than selling,
monopoly firms might have more control of the market, however social welfare is higher.
Therefore, the antitrust policy is considered as a facilitator of planned obsolescence as it
bans one of the alternative solutions to it.
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2.3 Demerits of Planned Obsolescence
The question comes to how long should a product last? Products with short lifespan are
undesirable, so are those with exceptionally long lifespan.

2.3.1 Parkard’s Classic Complaint

Parkard (1960) demonstrated the soaring consumption phenomenon thanks to
companies who kept creating new needs and wants, and intentionally shortened
products’ service life through the use of relative obsolescence.
There were numerous examples. Motorcars manufacturers shortened engine lifespan.

Women’s clothing kept changing style, which one could not just sew and stitch by
themselves to imitate the changes. Washer used plastic part, instead of metal, that was
designed to wear out. Small appliances like iron and toasters were not designed to be
repaired. Some necessary parts for repairing were next to impossible to buy. Model
numbers were hidden at the bottom of washing machine. These practices all served one
purpose, which was to make consumers not bother to repair it, but to buy a new one. So
Parkard’s book drew lots of attention on the unethical side of planned obsolescence and
tried to make consumers aware of it.
In addition, he also brought engineering ethics into light. Engineers were hired for their
expertise in engineering but they also had to act in line of the corporate’s objectives,
which might be increasing sales. Personal dilemma happened as engineers should not
harm the public’s interest in the first place.

2.3.2 Waste Generation is Not Sustainable

Tim Cooper (2005), a modern environmentalist studied the link between product
durability and sustainable consumption and coined the term ‘throwaway society’ to
describe the overconsumption problem nowadays. He said it was generally agreed that
Earth had a limited capacity to absorb physical material streams. Excessive consumption
in developed countries is at the expense of the well being of developing countries, which
deal with the wastes transported from elsewhere. He suggested slowing down
20
consumption by prolonging product durability, which is the ideal case for durable
products, where innovation is little.
2.4 Optimal Durability

Planned obsolescence is evidently a dilemma between corporate and social interests.
Economists have long been studying if monopoly would choose a socially optimal level of
durability since many decades ago. It was generally agreed that monopoly had an
incentive to maximize profits by choosing a suboptimal level of durability. The
relationship between planned obsolescence and reduced durability is undoubtedly strong
since planned obsolescence is all about manipulating products’ service life. Durability,
despite having different meanings, refers to the time period of the products’ service life
in this current research.
Moreover, earlier literature mainly focused on basis where monopoly was present and
studied what was the optimal durability choice for monopoly. However, as time passes,
the issue has extended to competitive markets too. This current research tries to also
focus on planned obsolescence from the perspective of social interest, instead of from a
firm’s financial perspective. As long as optimal durability is concerned here, it refers to
the equilibrium between (either monopolistic or competitive) firm’s costs of durability
choice and social interests. The optimal point is the most efficient durability choice for
competitive firms to remain competitive while they can earn reasonable profits in the
market. It can serve as a reference point for competitive firms nowadays.

2.4.1 Purchasing Durable Goods as an Investment Decision

Swan (1970) brought out the idea that consumers buy a product for the stream of service
that it renders over time regardless of its life span or durability. One classic example is
buying a razor. A razor consumer would only care about the cost per shave but not the
durability of the razor. They do not mind replacing razors often as long as they render
lower costs over a period of time. It is in other words, an investment decision (Cameron,
2015). As demonstrated by Cameron, there are two components that determine the
position of optimal durability: PV of benefits of consumers and PV of cost for the
durability choice by manufacturers (Figure 1).
21
On the y-axis, at the time of purchase, it is the present value (PV) of the product that
matters to consumers. With increasing durability, the present value increases with
diminishing returns. These diminishing returns can be explained by the discounted
future value (FV) and the decline in service performance over time as it starts to wear
out.

Figure 1: Optimal durability as determined by PV(social benefit) and PV(cost of durability
choice) (Cameron, 2015).
On the x-axis, a firm has the option to choose to produce a product with different
durability. The more durable product, the higher upfront capital cost in present terms.
This increase shows an exponential character towards high durability, as it requires huge
amount of capital to overcome technological limits (Saleh, 2008). Therefore, marginal
cost of durability is not a straight line. It eventually increases and reaches a point where
durability is at its maximum where further investment would not increase durability.
Optimal durability is sought at the intersection point of these two curves. When PV of
social benefits equal PV of the manufacturer’s cost, that durability is said to be optimal.
That is the durability choice of competitive firms in theory, where they earn normal
profits to justify staying in the business. Therefore, the importance of this optimal point
is to provide a reference for competitive market, since as mentioned, durability of either
too short or too long is undesirable. On the other hand, a monopoly firm has incentives
to choose a suboptimal point where profits are maximized.
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2.4.2 Social Cost is Not Internalized
But social cost seems to be neglected here. In this model, there is a dilemma between
social interest and firm’s costs. However, when it came to cost, Saleh (2008) focused on
the engineering side and it appeared that social cost, distinct from disposal cost, was not
internalized by firms. Social cost here refers to the damage to the environment caused
locally as well as to people in third-world countries. For example, when a firm practices
planned obsolescence, they might pay more disposal cost for the larger amount of items
that they discard, but not the indirect impact that e-waste causes, such as harmed health
of people living in third-world countries. Such cost is normally born by the victims when
firms do not internalize it.
Social cost happens at the time of obsolescence, which is distant from the present. By
internalizing this social cost, there is an additional cost. This additional cost at longer
durability is discounted more than shorter durability. So without upsetting the optimal
durability point, choosing a shorter durability is becoming less attractive while longer
durability remains as attractive as if social cost is neglected (figure 2). In other words,
firms are punished more for choosing short durability than long durability after taking
into account of social well-being.

Figure 2: New marginal cost of increasing durability after social cost is internalized.
Adapted from Cameron (2015).
23
It can be argued here that the discount rate of social cost should be lower than private
discount rate, for the sake of taking care of future generations (Stern, 2008). Usually,
social discount rate is used in evaluating a policy or investment based on their social
marginal cost and social marginal benefit. It reflects the explicit moral considerations on
future generations, as it is unethical to put fewer weights on future generations than on
present generation (Kelleher, 2012). I personally agree that, disposing an electronic
device now and later should reflect similar social cost. Thus, the explanation using
discounted social cost may not be totally convincing.
But in this product durability regard, if products are less durable, they are replaced more
often. Repeated purchases and subsequent disposals accumulate more waste, implying
higher social cost. By contrast, if products are more durable, they are replaced less and
less e-waste is resulted, compared to shorter durability given the same time period. To
illustrate this with a quick example, if a product lasts only 1 year, then in 10 years’ time,
it is replaced 10 times. If it lasts 2 years, it is replaced 5 times and so on (Figure 3).
Therefore, in a cumulative perspective, even we assume a 0% social discount rate at the
extreme, choosing a shorter durability still results in a higher social cost than that by
choosing a higher durability. Therefore, this can serve as an alternative explanation why
social cost is diminishing towards higher durability decision as seen in Figure 2 on the
previous page.

Figure 3: Diminishing social cost towards higher durability. When waste is quantified in a
cumulative perspective, assuming a 0% social discount rate, towards higher durability, waste
is gradually reduced, so is the additional cost.
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2.4.3 Optimal Durability may be Independent of Market Structure
Market structure has long been a debate among economists on the issue of planned
obsolescence. Swan (1970) criticized earlier literature and concluded that durability
choice of a monopoly could be larger, equal or less than that in competitive markets.
Both monopoly and competitive firms strived towards the same goal of minimizing costs.
Therefore, it was independent of market structure.
However, Swan’s claim of the independence on market structure included some

important assumptions. A detailed literature survey (Schmalensee, 1979) tried to verify
the claim by surveying related work, which relaxed each of the assumptions. He
concluded that Swan’s claim held true in some cases but not all. Market structure does
impact in other conditions. Therefore, Swan’s claim cannot be taken for granted.
Nevertheless, Swan’s contribution, although being refuted by later scholars, provided

some important insights since this implied that planned obsolescence could be
potentially applied in wider context such as in competitive markets, which is a more
common scenario in today’s commercial world. The significance and impact of related
study on planned obsolescence may therefore be of greater value, as it proved to be a
general business practice nowadays.

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2.5 Focus on Competitive Markets rather than Monopolistic
Most firms nowadays operate in a competitive market but not in a monopolistic position.
Even these firms are not monopoly, they still have a certain degree of market power
(Waldman, 2003). Thus earlier contribution on planned obsolescence still offers some,
but not much value to nowadays society where there are few truly monopolistic markets.
Added by Fishman et al (1993), monopoly position is only temporary. There are always
new imitators and new entries, which often exist in reality. To maximize the output of
this research project, competitive markets are studied and focus is placed on maximizing
social interests but not firm’s profitability.
In fact, planned obsolescence does not only happen because of the exploitation of
monopolistic power but it happens in competitive markets too (Grout & Park, 2005).
Grout defined planned obsolescence as firms withholding value-adding features, which
could have been added at zero cost to their products. However, these firms may choose
to include these features in the next generation. Grout demonstrated that in some
situations, firms indeed cannot survive without a certain degree of planned obsolescence.
Grout’s findings were indeed based on product category where there is continuous
improvement in different product generations. By manipulating the arrival of new
features, they could render older models obsolete sooner than they could physically and
technologically last. On the other hand, there are firms that release several product lines
subsequently, each of which varies in a number of features. They are priced differently as
a result. Therefore, I propose that it may become an excuse for using planned
obsolescence. They might present delaying introduction of new attributes as a need to
serve different segments of market rather than to extract lucrative profits from
consumers. Solely seeing from the perspective of product attributes, i.e. technological
obsolescence may not be sufficient as firms find more excuses to justify their planned
obsolescence practices nowadays.
It is quite obvious that the idea of planned obsolescence has evolved over time, from the
very beginning as a practice for monopoly to competitive markets. Now, in this digital
age, the tactics of planned obsolescence is becoming more complex and come in many
different forms, especially in continuously innovating products like smartphones. It is
26
becoming more difficult to define behaviour of planned obsolescence and for consumers
to observe them.
2.6 Secondary Market

The presence of secondary market has significant impacts on the choice of durability of
firms. Any used durable goods are indeed perfect or imperfect substitutes for new
durable goods. The assumption of perfect secondary market in older economic models
has limitations on consumption goods where consumers highly expect sales in the future
(Bulow, 1986). Therefore, this assumption has to be relaxed for products that depreciate
over time.
Waldman (1996) looked at the real world market where the introduction of new durable
goods lowers the value of used goods. Variations exist between owners’ and buyers’
valuation in that durables goods, and these variations create the secondary market for
trading. If the substitutability between used and new products is high, the availability of
used products may also lower the price of new products (Waldman, 1996). In response,
monopolists have incentives to reduce the durability of products in order to reduce
availability of used goods in the secondary market. Therefore, there are interactions
between secondary and primary markets.

2.6.1 Information Asymmetry

Waldman (2003) brought the issue of information asymmetry (Akelof, 1970) into the
study of durable goods. Owners have more information concerning the quality of the
used good than buyers. They tend to hold on to good quality ones to themselves and sell
low quality ones. As a result, there are more low quality goods than good quality ones in
the secondary market. This causes an adverse selection problem that durable goods in
the secondary market are usually of lower quality compared to all durable goods in the
entire market. Leasing is said to be able to eliminate such an adverse selection problem.

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2.7 Characteristics of Continuous Innovation
2.7.1 Continuity and Incremental Innovation

Continuous innovation in this paper could have two opposite definitions. The first is
opposite to ‘little or no innovation’, which is self-explanatory. The other end is the
opposite of ‘discontinuous innovation’, which is also called radical innovation1.
If the change or improvement is only evolutionary, it does not cause breakthroughs in

technology nor stand out as a new product category (Veryzer, 1998). Is it worth the costs
associated with planned obsolescence?

1 Radical innovation is not studied in this paper because it is obvious that replacement is
very desirable if the radical innovation brings higher efficiency at lower costs
(Christensen, 1997). Besides, Veryzer (1998) defined discontinuous innovation as ‘new
products that involve dramatic leaps in terms of customer familiarity and use.’ Again, if
these improvements are so revolutionary that these radical innovations form a new
product category in consumer perceptions, then it is very sensible that the benefit of
technological advance is greater than any cost associated with planned obsolescence. For
example, when digital camera was invented, it immediately creates a new product
category that is distinct from film camera.

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Continuous innovation is marked by incremental, non-revolutionary innovation.
Discussing the issue of planned obsolescence and product durability in this paper, only
continuous innovation (incremental innovation) is studied, as it is arguably worthy. An
example of continuous innovation is increasing pixels in digital camera.
The technological progress of a typical continuous innovation can be demonstrated by

the following diagram (Volti, 1988).

Figure 4: Technological progress of a continuous innovation (Volti, 1998).
Technological progress involves knowledge accumulation and competence enhancing. It

is a gradual process that takes considerable time. During this time when technology is
steadily improving, replacements of product are generally beneficial to consumers since
they may enjoy better functioning products. However, how frequent should replacement
be so that it is socially optimal? It is apparent that the frequency of such replacements
matters as it could create enormous electronic wastes.

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2.8 Merits of Planned Obsolescence in Continuous Innovations
Although previous parts discussed the demerits of planned obsolescence in products
with little innovations, there are some merits as well, especially in product areas
undergoing continuous innovations.
2.8.1 Planned Obsolescence is Necessary for Technological Advancement

First of all, planned obsolescence may be necessary for technological advancement to
progress (Fishman, Gandal, & Shy, 1993). Fishman showed that development cost
mattered in the firm’s durability decision. When development cost is not too low and not
too high (which is likely the most common case in reality), it is up to the firm to decide to
produce either durable or non-durable goods. If the firm produces durable goods,
economy would stagnant and firms lack financial incentive to innovate. It is because
customers who already hold a durable are only willing to pay for the additional benefits
of innovation in order to upgrade. On the other hand, if a firm produces less durable
goods, there will be continuous innovation since there is financial incentive. This is
because customers have to bear both the cost of additional benefits and the cost of
production of the new generation, when the old generation becomes obsolete. Therefore,
innovation is more encouraged in a world where products are short-lived as suggested by
Fishman (1993).
This perspective by Fishman (1993) may apply well in the context of electronic products
nowadays, where customers cannot just pay for the technological improvement between
generations, but they have to pay for an entire gadget in order to upgrade. On the firm’s
side, it is more profitable since production cost is entirely paid by consumers. However,
on the consumers’ side, it has not been discussed that part of the price can be absorbed
by reselling the old generation gadget. The existence of secondary market could have
been discussed together.

2.8.2 Planned Obsolescence Improves Product Quality in Other Dimensions

Second, planned obsolescence actually improves product qualities in dimensions other
than durability (Strausz, 2009). Strausz’s explanation rests on the multi-dimensional
30
character of product quality. In other words, durability is only one of the many aspects
when one evaluates quality. Strausz argued that durable goods usually have some
attributes that could only be learnt by using it. And these unobservable attributes are
evaluated when consumers use it regardless durability. If consumers are satisfied by the
product quality as a whole, they might make repeat purchase. His result showed that
planned obsolescence in fact enables higher quality in other dimensions because
repeated purchases are the very drivers of product quality.
In addition to this, Choy (2001) also demonstrated a similar concept that planned
obsolescence might serve as a sign for quality. Since it is hard to evaluate quality before
the consumption of the product, firms are forced to use introductory pricing to reveal its
quality (Choy, 2001). These firms believe that after consumers learn that their product
quality is high, they will make repeat purchases. More revenues are therefore generated
in subsequent purchases rather than at present. Shorter product life span empowers
customer as they have the power to punish a firm sooner by not buying from them the
next period.
However, having discussed this approach of delayed return, planned obsolescence is an

essential element in order for subsequent purchases to happen sooner. Choy (2001)
concluded that frequency of repeat purchases and future expected revenues, which are
indicative of product quality, have negative correlation with durability. In addition, Bass
and Bass (2001) also suggest that repeat purchase is motivated by consumers’ perceived
improvement on functionality. Therefore, it can be summarized that repurchase
behaviour is closely related to product quality.

2.8.3 Planned Obsolescence Captures Values from Both Adoptors and Repeaters
It is important from firms’ perspective to release new generations of product once in a
while. In a fast-tech product category study, Bass and Bass (2001) developed a model to
describe the diffusion pattern of these products. They separate the sales of first time
buyers (adoptors) and repeat buyers. It is said that adoptors and repeaters have different
needs. Adoptors generally look for lower-priced products with just enough functionality,
while repeaters look for improved functionality at a higher price. When a new generation
with better features is release, the older generations usually experience a price drop. This
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idea is similar to time inconsistency discussed, except that here involves product
improvement in the second period. Planned obsolescence may actually help adoptors,
who care less about having the newest feature to own that fast-tech product by buying
the last generation product.
2.8.4 Replacement is Necessary for Improvements

In fact, under product categories where there is continuous innovation, replacement is
sometimes necessary for product improvements to happen (Cameron, 2015). Some
incremental improvements, such as software upgrade and algorithm change may not
require replacement. But discrete improvements such as added hardware, increased
resolution screen require replacement. So physical world’s limitations also lead to
premature obsolescence, but not confined to firm’s lucrative motives.

2.8.5 System Change is Slow if Things are Too Durable

System change can be very slow if durability is made too high. When products become
too durable and there is no obsolescence, consumers are unwilling to replace products.
As discussed above by Fishman (1993), planned obsolescence in fact enables
technological progress. On the extreme, durables could lead to lock-in, which can be
disastrous. Unruh’s (2000) demonstration of carbon lock-in can be attributed to the
relatively long durability of fossil fuel vehicles. While consumers’ old fossil fuel cars are
still functioning, the willingness to pay for new greener cars is only the additional
benefits. Not until their old cars become obsolete, will they be willing to pay for the cost
of production as well. The time needed for old vehicles to become obsolete delays the
diffusion of more energy efficient options, e.g. electric cars. Increasing returns of many
fossil fuel users also makes it hard to escape from the lock-in. Therefore, very durable
goods may render the market inadaptable to environmental changes. The value of
planned obsolescence is to prevent such undesirable lock-ins.
This is especially worth noticing in product areas undergoing continuous innovations. It

is said that goods produced have to be non-durable to yield excess surplus (Fishman,
1993). Therefore, the durability of these goods is especially controversial compared to
32
product areas with no innovations. Therefore, the use of planned obsolescence to achieve
shorter product service life may be desired in these continuous innovating products.

2.9 Guiltinan’s Call for Contributions

A more recent study by Guiltinan (2009) linked planned obsolescence to environmental
ethics. He looked into the social responsibility of product developers and firm strategists.
It was suggested that, product designs, marketing practices and government policy are
all potentially effective in tackling the problem of overusing planned obsolescence over
time.
This dissertation study is also in response to Guiltinan’s (2009) call for more
contribution towards how consumers interpret and respond to marketing tactics that
motivate consumers to choose more durable options. Consumers need more informed
choices when purchasing durable goods. He suggested that information content,
framing, timing and sources are possible areas to study. The effect of information
content is chosen to be the focus of this dissertation.

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3 RESEARCH DESIGN
3.1 Exploratory Research
The exploratory research serves to shed light on general consumers’ insights regarding
planned obsolescence and disposal of smart devices, which are products with rapid
technological improvements. A recent market report conducted by Green Alliance (2015)
is studied for this purpose. The report is very detailed and exhaustive, covering subjects
from consumer’s behaviour, planned obsolescence to waste economy.
Therefore, insightful ideas are reported and discussed in the findings. Some ideas are
adopted for the subsequent descriptive research, which attempts to develop on these
insights and quantify them.

3.2 Descriptive Research
3.2.1 Purpose
The purpose of the descriptive research is to quantitatively describe the target
population, which this dissertation is studying on. It is done through a social survey on
Qualtrics (http://survey.mbs.ac.uk). The samples surveyed are assumed to represent the
population that they belong to.
A full version of the Qualtrics survey can be found in appendix 1.
It is important to understand the characteristics of the surveyed population so that it

provides grounds for causal research. Although it is not possible to draw causal links
from descriptive research, by understanding the people whom are surveyed, it defines
the degree of validity of the results in causal research. The results in causal research
section may only hold true for consumers with certain characteristics. Given the limit of
scale in this dissertation and possible variations across different countries, ethnicity and
culture, findings in causal research may have low external validity that one should take
note of. However, findings in the descriptive research will likely hold true within the
surveyed population.
34
3.2.2 Sampling
The sampling choice was a mix of convenience and selective sampling. I mainly invited
participants whom I already established personal contact before. These participants were
mainly based in the UK or Hong Kong. Invitations were sent online individually through
Facebook and messenger apps. Sample size was targeted at 100, such that every
subgroup would have around 20-30 respondents to generate reliable enough results.
Respondents were invited only if they fit in the specific age group of 18-34. According to
a report by Ofcom (2014), Office of Communication, the knowledge and use of new
services on smartphones or tablets among UK adults were surveyed. Regarding this,
75% of adults aged 15-34 expressed that they ‘know a lot about it and have already used
it’. While among adults aged 35-54 and 55+, the figure dropped to 50% and 18%
respectively. Therefore, it is decided that, adults who are aged from 18-34 are the focus
as most of them have adequate knowledge and experience on smart devices to provide
meaningful responses. (For ethical concern, adults under 18 were not invited.) Only
people within this age range were invited to participate in the survey as well as the
experiment.
Since this survey was conducted entirely in English, adequate language proficiency was
another sampling criterion. In most cases, the researcher only invited respondents who
were either in their tertiary education or had already completed tertiary education.

35
3.2.3 Instrumentation
Ten statements derived from exploratory research were presented to respondents, who
indicated their degree of agreement to each of them, from strongly disagree (1) to
strongly agree (5). These statements were concerned with consumers’ attitudes, opinions
and behaviour towards the issue of planned obsolescence. It is possible to draw
conclusions that generally describe these samples’ characteristics.

Table 1: The ten statements presented to respondents.
Related to product improvement:

1) Owning the latest gadget is important
2) Continued software support are important
3) Repairability (when it breaks) is important
4) Frequent release of upgraded models is desirable
Related to consumption:
5) I always resell my used gadget
6) I prefer owning a gadget than renting
Related to e-waste:
7) Manufacturers are responsible for environmental impact caused by e-waste
8) Consumers are responsible for environmental impact caused by e-waste
9) E-waste is an important issue in developed countries, e.g. UK, US
10) E-waste is an important issue in developing countries, e.g. West Africa, India
3.2.4 Data Collection

The Qualtrics survey was opened to the public for 11 days, from 29th May 2015 to 8th June
2015.

3.2.5 Data Analysis

Bar charts were used to visualize the overall distribution on degree of agreement to each
statement.

36
3.3 Causal Research
3.3.1 Purpose
The purpose of this research is to find out if educating consumers of planned
obsolescence would cause changes on their attitude, value and behaviour towards a
smartphone. It also quantifies the effectiveness of different information contents on
causing such changes, which constitute consumer pressure. The relative effectiveness of
four information contents is compared. This part is essentially an experiment conducted
through Qualtrics, together with the descriptive research.
A full version of the experiment in Qualtrics survey can be found in appendix 1.

3.3.2 Sampling & Data Collection

Same as described in descriptive research.

3.3.3 Pilot Test

Prior to launching the survey, I invited two peers to review my survey questions as a
whole through telephone conversation. This step was important in making sure that
every sentence could be understood by respondents, who had no previous background on
planned obsolescence. Some wordings, images and questions were adjusted accordingly.
Pilot test took place on 31st May 2015, where twelve respondents were invited to fill out
the survey. I reviewed the results and observed that the impact of altering information
contents on the dependent variables was obvious. It was likely to achieve statistically
significant findings. Therefore, no further changes were made to the survey and it was
officially launched then.

37
3.3.4 Brief Overview of Procedure
There were basically two stages, which were before and after exposure to information
contents. In the first stage, no information on planned obsolescence was presented. In
the second stage, information on planned obsolescence was presented (IV). In each
stage, a respondent from any subset evaluated a new smartphone (DV) in three different
dimensions: attitude, values and behaviour. The survey was designed to quantify these
changes between the first and second stages.

Learns Planned
Evaluates a new Obsolescence
smartphone Evaluates again
(Consumer Focus)
Learns Planned
(Social Focus)
An individual
respondent
Learns Planned
(Commercial Focus)
Learns Planned
(All-round Focus)

Figure 5: Flow of the causal experiment.
38
a) Before Information Presentation
First, respondents were assumed to be a current user of a mobile produced by a non-
existent company called Sonntag Co. Respondents were then presented a new mobile
phone Sonntag Co.2 (Figure 6), which was just released now, and they were asked to
indicate their responses to the three DV (attitude, values and behaviour), which are
discussed in the latter part.

Figure 6: Respondents are presented with a new smartphone, as shown in the survey.

These responses were the control set, since they were recorded prior to any information
content related to planned obsolescence.
b) After Information Presentation

After that, they proceeded to the next page, which contained information content about
planned obsolescence. There were in total four sets of information content while each
respondent was only able to see one set. As a result, only one IV was studied per
respondent.

2 A non-existent company was used to reduce bias and formed attitude on any real
companies, which might affect their responses.
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3.3.5 Independent Variables (IV) – Information Content
The focus of the causal research is to study the effect of using different information
content when it comes to educating consumers of planned obsolescence. Therefore,
information content is the IV.
There were four IV in four subsets in the experiment. In each subset, only one IV was
studied against the dependent variable (DV). Each of the IV represented a specific
information content, which was used to educate consumers the effect of planned
obsolescence. It is hypothesized that, having learnt manufacturers’ use of planned
obsolescence, consumers would show negative attitude, place lower values on a
smartphone and change their behaviour by prolonging use of a smartphone. Such
hypotheses are to be validated by the experiment.
By having responses before information presentation and four subsets of responses after
that, it is possible to compare the effectiveness of different information content used to
educate consumers of planned obsolescence.
Information contents were divided into four categories:

1) Consumer focus,
2) Social focus,
3) Commercial focus and,
4) All-round focus.
They were divided in this way since there is not an obvious answer to which is the most
effective information content. If consumers care about their self interests the most, it is
likely that consumer focus information content is the most effective. If they place social
interest and the well being of others on top of their self-interest, then social focus content
is likely more powerful. Also, if business ethics is more valued by consumers, it might be
the most effective information content too. Last, all-round focus aims to test if
presenting as much information as possible to consumers would produce the largest
impact, as they might be overwhelmed with this information and believe planned
obsolescence is so undesirable. These are possible explanations demonstrating that there
is no explicit answer to their relative effectiveness in creating consumer pressure, and
finding out which, is the very purpose of this research.
40
Below are the detailed descriptions of each IV.
a) Consumer Focus Content (IV1)

In the first subset, information content was presented as a personal loss. ‘Consumers’
were used as the subject when the effect of planned obsolescence was introduced.

Table 2: Consumer focus information content presented to respondents.
Some manufacturers are said to have smartly shortened the service life of
mobile phones.
Tactics include:
• Frequent release of new models annually or biannually,
(so that old models become less attractive)
• Discontinued software support,
(old models cannot upgrade to new OS)
• Overly expensive repair fees and,
(repair fees may be as high as buying a new phone)
• Marketing the phone as a fashion product that changes every period.
(eg. using new colours, new exterior materials in design)
It is called planned obsolescence, which causes:

1. Consumers want to replace phones sooner.
(even their old ones are still functioning)
2. Consumers lose resell value in second-hand market.
(as new models cause old models to depreciate faster)
3. Consumers feel out-of-fashion with their old gadgets.

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b) Social Focus Content (IV2)
In the second subset, information content was presented as a social loss. Subjects used
were concerned with public goods and social values. The effects of planned obsolescence
on environment, less privileged people and developing countries were described to
respondents.

Table 3: Social focus information content presented to respondents.
mobile phones.
Tactics include:

1. Environment damage due to increased e-waste.
(Discarded mobile phones become e-waste, which contains heavy
metals and chemicals)
2. Developing countries receive more e-waste from affluent
countries.
(These countries earn money by extracting metals (eg. Copper) from e-waste, but e-
waste could damage citizens' health and cause diseases)
3. The less privileged cannot reuse old phones.
(When phones are not compatible with current software)
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c) Commercial Focus Content (IV3)
In the third subset, information content was presented as gains by corporate firms, who
practiced planned obsolescence. Firms were therefore used as the subject when
describing the effect of planned obsolescence.

Table 4: Commercial focus information content presented to respondents.
mobile phones.
Tactics include:

1. Firms may earn more profits by inducing consumers to buy new phones.
(While their old ones are still functioning)
2. Firms regularly release new models such that customers keep paying
them.
(This allows them to maintain steady revenues in each period.)
3. Firms want to shorten lifespan of smartphone so that less of them
are available in second hand market.
(Second-hand phones may compete with new phones, this allows them to reduce
competition from second-hand market)
d) All-round Focus Content (IV4)

The last subset was simply the summation of the above three information contents. The
purpose was to study how does presenting more information to respondents affect the
DV, compared to presenting each selective information content individually.
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3.3.6 Dependent Variable (DV) – Responses to Information
The effect studied was multi-faceted and it was not limited to only one DV. As discussed,
this study aims to study the effect on consumers’ attitude, value and behaviour, each of
which was measured by one question at a time. It is noted again that, this research aims
to find out if consumers perceive planned obsolescence in innovating products as a bad
practice so that consumer pressure can be created based on that. The possibility of
information content causing consumers to behave in favour of planned obsolescence
instead is not of interest here. Therefore, effects on DV were studied only in one
direction, either increase or decrease, but not both.
For each DV, respondents were asked to rate their response twice: before and after
learning information on planned obsolescence. The questions before and after event
were exactly the same. They are illustrated in figure 7, 8, 9 and 10.
44
a) Measuring Attitude: Desirability of a New Smartphone (DV1)
Respondents rated their desirability of a new smartphone by an interval scale, from -100
(not desire to replace) to +100 (desire to replace), with 0 representing neutral.
H0: Exposure to information increases or does not change desirability

Ha: Exposure to information decreases desirability
It was hypothesized that exposure to information about planned obsolescence would

lower consumers’ desirability of a brand new smartphone3. A one-tailed test was used to
validate such an effect.

Figure 7: Question asking on desirability of the new phone as written in the survey.
Figure 8: Question asking for re-rating desirability, on the subsequent page of the survey,
after information on planned obsolescence was presented.

3 The effect of desirability change in positive direction could not discourage planned
obsolescence. Thus it was not of value in this research and was not tested. A one-tailed t-
test was employed instead of two-tailed t-test.
45
b) Measuring Values: Willingness To Pay for a New Smartphone (DV2)
Respondents indicated their willingness to pay (WTP) on a ratio scale measured by GBP,
from £0 to £1000. A converted label for HKD was also shown for convenience, at $0,
$6000 and $12000 (exchange rate of GBP1 = HKD12 is used). A reference point, which
was the price of Apple iPhone 5s was given in order to make it easier for respondents to
decide on a price value.
H0: Exposure to information increases or does not change willingness to pay

Ha: Exposure to information decreases willingness to pay
It was hypothesized that after learning information about planned obsolescence,

consumers’ WTP would decrease in response4. A one-tailed test was used in this case too.

Figure 9: Question asking on their willingness to pay for the new phone as written in the
survey.
In the same way, this question was repeated after presentation of information content.

4 The change of WTP in positive direction was not studied here since only decreased
WTP could have punishing power to pressure firms who practiced planned obsolescence,
which is the purpose of this current research. Thus a one tailed t-test was used instead of
two tailed t-test.
46
c) Measuring Behaviour: Anticipated Years of Use of a New Smartphone (DV3)
Respondents were asked to indicate their anticipated years of use, provided that they
decided to buy the replacement. It was measured by a ratio scale, from 0 to 6 years, with
one decimal place.
H0: Exposure to information decreases or does not change the anticipated years of use
Ha: Exposure to information increases the anticipated years of use
It was hypothesized that after consumer learnt the information on planned obsolescence,
they might change their bebaviour and use their smartphones for a longer period. By
prolonging use of their smartphones, consumers could indirectly help reduce e-waste.
The effectiveness to achieve this outcome was of interest here5. Therefore, a one-tailed
test was again adopted for this DV.

Figure 10: Question asking on respondents' anticipation on the new phone's service life, as
written in the survey.
In the same way, this question was repeated after presentation of information content.

5 Change of years of use in negative direction could not contribute to reducing e-waste
nor discourage planned obsolescence; hence it was not studied here. A one-tailed t-test
was again used instead of two-tailed t test.
47
3.3.7 Data Analysis
Data analysis mainly involved comparing the mean of DV before and after exposure to
information content. This could find out the magnitude of attitude or behavioural
change. Paired t-test was used to compare the two sample means6. A confidence level of
95% was used to verify the statistical significance of the difference. If a change is
statistically significant, H0 can be rejected and we can interpret causal relationship
between IV and DV.

6 Paired Z-test was not used since the population mean is not known.
48
4 FINDINGS AND INTERPRETATIONS
4.1 Exploratory Research Findings and Interpretations
4.1.1 Substantial Waste Generation

According to the report by Green Alliance (2015), it is found that in the U.S. in 2010,
89% of mobile devices went to landfill. Besides, there was said to be a ‘substantial
fraction of lower specification devices’ being transported to developing countries where
they were either reused or disposed.
It can be observed that most of the disused mobile devices either end up being trash
locally or transported in developing countries. This is an environmental issue on a global
scale.

4.1.2 Manufacturers’ and Consumers’ Responsibility

There are mentions about manufacturers’ and consumers’ role in reducing
environmental impact in the same report (Green Alliance, 2015). On one hand, policy
makers tend to impose more social cost and environmental cost to manufacturers and
retailers by legislation. Producers have the responsibility to abide by the law. Besides, it
is also said that the impact of consumers’ using of smartphone, as a consumption
process, to the environment is minimal, however, much impact comes from the
manufacturing process, which takes up around 60-85% of the impact.
On the other hand, the report (Green Alliance, 2015) also found that by having a
consumer using their current smartphone for one additional year could help reduce CO2
impact by 31%.
Although it is apparent that manufacturers should be liable to environmental impacts,

consumers may also help reduce waste at an individual level by altering consumption
pattern. It is worth studying if consumers actually realize their possible contribution.
49
4.1.3 Repair and Updates are Important
Green Alliance (2015) also found out important insights regarding repairing and
updating smartphones. First, repairing is costly and uneconomical for most of the smart
devices. Possible reasons are high technician costs and design choices which
manufacturers adopted to impede disassembly but to favour slimness of the device.
95% of iFixit users express that if they are able to repair their device, they tend to
repurchase from the same manufacturer when they need other products next time.
Consumers also expressed that the device’s value in the second-hand market depends
largely on the accessibility to updates. In addition, 70% of consumers in the U.K. do not
see having the newest devices as an important issue (Green Alliance, 2015). Although
manufacturers design phones that are less ready for third party repairing, repairs as well
as updates appear to have great values to consumers as shown by these findings.
Therefore, firms should reconsider delivering these values again by reducing planned
obsolescence.
4.1.4 Reuse Possibility is High

The report (Green Alliance, 2015) highlighted reuse as a solution to excessive e-waste.
First, in the U.K., it is found that for every smartphone in use, there are as many as four
other used phones being idle in the drawers. Meanwhile, there are only 12% of
smartphone replacements actually involve reselling the old ones. These two factors
already represent a substantial market for reuse. In addition, market saturation and
slowing technological advancement are opportunities that favour more durable devices
(Green Alliance, 2015).
Moreover, 16% of consumers in the U.K. express that when they want a new device, they
are in favour of simply changing the appearance of the device rather than an entire
updates in terms of changing interior components. Some credible experts predict that in
2018, reuse will take up 8% of new sales of smart devices (Green Alliance, 2015).
Having learnt that the substantial resell market, the possibility of implementing reuse
programs is huge too, especially if the exterior looks of device can be changed from time
to time. Perhaps a modular approach is appropriate to achieve a greater reuse rate.
50
4.2 Descriptive Research and Causal Research Sample Demographics
In total, there were 109 responses collected. Their demographics are summarized in the
following table.

Table 5: Demographics of the Sample
Sample Demographics7
Respondent Counts 109
Age 21-25: 90%
18-20: 5%
26-30: 5%
Prefer not to say: 1%
Gender Male: 56%
Female: 43%
Nationality Hong Kong: 80%
Others: 9%
China PRC: 7%
British: 2%
Place of Residence Hong Kong/ China: 79%
United Kingdom: 20%
Others: 1%
Time Spent on 1st Quartile: 4 min
Completing the Survey Median: 6 min
3rd Quartile: 10min

7 Percentages are rounded off by Qualtrics.
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4.3 Descriptive Research Findings and Interpretations
In each section, two statements asked in the survey were compared. It is noted that,
when it comes to comparing the mean, the mean is the average of all response values.
Responses were recorded as strongly disagree, disagree, neutral, agree and strongly
agree, while they were coded from 1 to 5 respectively.
4.3.1 Consumers’ Need for Smartphone Novelty is Relatively Small

There was a general tendency that respondents perceived owning the newest gadgets and
frequent release of new models were not important to them. In both graphs, it could be
seen that responses on the disagreeing side were significantly larger than those on
agreeing side. Their means (2.75 & 2.77) lied between disagree and neutral.

0% 50% 100%
Owning the latest gadget is important
Frequent release of upgraded models is

desirable
Strongly Disagree Disagree Neutral Agree Strongly Agree

Figure 11: Bar chart showing consumers' need for novelty.
This result to some extent deviated from my expectation. Nowadays in fast-tech products
where improvements are made relatively quick, consumers would normally desire them
much. There are many factors accounting for this small need for novelty, for example,
economic factors, culture, educations and so on. More importantly, smart devices seem
to be approaching the end of technological progress of a continuous innovation as
discussed, where advancement starts to slow down. These factors may render new
products less desirable. Nevertheless, this result showed that respondents in the sample
were generally more rational and likely more resistant to smartphone marketing tactics.
52
4.3.2 Continued Software Support and Repairability are Highly Valued
Consistent with findings in exploratory research, most respondents in the samples
indicated that continued software support and repairability were important. In the
graph, it could be seen that most responses were recorded on the agreeing side and their
means (4.06 & 4.10) lied between agree and strongly agree.
0% 50% 100%
Repairability (when it breaks) is important
Continued software support are important

Figure 12: Bar chart showing consumers’ need for aftersales support.
This added further support to previous finding in secondary research that novelty was
valued less than durability of smartphones. It showed a general tendency that
respondents in the sample were in favour of using a smartphone for a longer period of
time, and they were willing to lengthen the service life of their smartphones by
upgrading the software as well as repairing them when they broke down.
53
4.3.3 Most do not Resell Gadgets and Almost All Prefers Owning than Renting
Regarding reselling smartphones, results from our samples showed that around a
quarter of respondents agreed or strongly agreed that they always sold their used
smartphones. This was slightly more optimistic than findings in exploratory research,
which suggested that only 12% of smartphone replacement involved reselling
smartphones. However, the majority of respondents still did not always resell their
gadgets as seen in the chart and the mean (2.45) lied between disagree and neutral. If
any smartphone was not sold or transferred for reuse, it was very likely idle in a drawer.
Understanding this, it agreed with the previous secondary research there was substantial
market for recycling, reusing or donating used smartphones.

0% 50% 100%
I always resell my used gadget
I prefer owning a gadget than renting

Figure 13: Bar chart showing consumers' resell and owning preferences.

Moreover, despite the benefits of renting durable goods discussed by many scholars, in
smartphone category this was apparently not a welcomed idea. Almost all respondents
agreed or strongly agreed that they preferred owning a smartphone rather than renting
one. The responses were heavily skewed to the agreeing side and the mean (4.39) showed
a very strong preference on owning to renting here.
There are a few possible causes. First of all, they might see renting smartphone as a rare
and unusual practice in the industry, which is indeed not. One can see signing
contractual agreement with telecom companies as paying rents. By reselling the
smartphone at the end of its service life, it is similar to returning the smartphone and
getting back the deposit, which you pay to rent it in the first place. In other words, if a
consumer chooses a monthly payment plan at a telecom company and decides to resell
54
their phone later, they are essentially renting a smartphone. Respondents may be yet to
understand such an interpretation of renting a smartphone. Second, there might be
psychological factors that people prefer owning a smartphone as a private and personal
good rather than renting it. Last, some people may be concerned about hygienic
problems with renting smartphone as well.
4.3.4 Manufacturers and Consumers Both Considered Responsible for E-Waste

Impact

0% 50% 100%
Manufacturers are responsible for

environmental impact caused by e-waste
Consumers are responsible for

environmental impact caused by e-waste

Figure 14: Bar chart showing consumers' view on responsibilities.
Respondents mostly agreed or strongly agreed that manufacturers and consumers were
both responsible for the environmental impact created by e-waste. It is noteworthy that
respondents agreed that responsibility should go to manufacturers to a greater extent
than that to consumers. The mean agreeing for manufacturers responsibility (4.20) was
slightly higher than the mean for consumers’ responsibility (3.87). As pointed out in
exploratory research, both parties have a role to play in e-waste production and it
seemed that respondents were also aware of their contribution to e-waste creation to
certain extent. It is possible to educate consumers of different ways and impacts by
prolonging use of their smartphones in order to reduce carbon footprint as found out in
the exploratory research.
55
4.3.5 E-Waste Considered a More Important Issue in Developed Countries than in
Developing Countries
Respondents rated e-waste as a more important issue in developed countries (eg. US,
UK) than in developing countries (west Africa, India). Their respectively means were
4.04 and 3.49. It was in contrast to findings in exploratory research, where it was
suggested that developing countries who received e-waste from affluent countries were
suffering as much as developed countries.

0% 50% 100%
E-waste is an important issue in developed

countries, e.g. UK, US
E-waste is an important issue in developing

countries, e.g. West Africa, India

Figure 15: Bar chart showing consumers' view on e-waste issues.

One reason may be that respondents were not able to associate wastes produced in
affluent countries with the well being of people in developing countries, i.e., they were
not aware that some e-waste is transported overseas for disposal. This is an important
insight as further education on planned obsolescence for consumers should not assume
that electronic gadget consumers are well informed about general disposal practices by
corporate firms.
56
4.4 Causal Research Findings and Interpretations
There were four random sets of experiment in the survey, while each time, only one of
them was presented to a respondent. Each of them directed them to a specific
information content in the latter part of the survey. Due to the randomization, responses
cross the four groups were not evenly distributed (table 6). Besides, a few respondents’
skipping of questions also led to minor fluctuation in sample sizes across the three DV
analyses.
Table 6: Response counts for each subset.
Information Content
IV3: Commercial Focus

IV1: Consumer Focus
IV4: All-round Focus

IV2: Social Focus
Total Respondent Counts 26 25 28 30

Effective responses on Desirability 25 22 26 28
(DV1)
Effective responses on WTP 25 24 26 26
(DV2)
Effective responses on Anticipated 26 22 28 29
Service Life
(DV3)
Only responses recorded both before and after information presentation were considered
as effective responses, with the following exception: some answers were assumed for
technical reasons. For instance, if a respondent agreed on the default WTP (£400)
shown on the scale and thus they did not move the slide at all, his/her response was not
recorded. But if he/she indicated a value change on the same question after learning the
information on planned obsolescence, it will be assumed that their first response was
exactly the default value (£400). The need for such an adjustment was reviewed case-by-
case. A full data set is available in appendix 2.
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4.4.1 Effect on Desirability (DV1: Attitude)

Table 7: Results showing the effect of information content on desirability of the new
smartphone
Information Content

IV1: Consumer Focus

IV2: Social Focus
Desirability of a New Smartphone: -4.48% -13.70% -6.56% -11.13%
Mean change after presentation of
information
p-value 0.0529 0.0081 0.0462 0.0003
(one-tailed t-test for –ve direction)
Rank of effectiveness - 1st 3rd 2nd
H0: Consumers’ exposure to information increases or does not change desirability

Ha: Consumers’ exposure to information decreases desirability
In table 7, the mean change on desirability of a new smartphone (attitude) after

presentation of information was presented as a percentage change8. Overall, all groups
showed a negative change in mean. However, at 95% significance level, the change in
consumer focus content group was not statistically significant, i.e. p-value was larger
than 0.05. We could not determine its effectiveness yet. The other three groups showed
statistically significant decrease on desirability to replace, i.e., p-value was smaller than
0.05. Therefore, in social, all-round and commercial focus content groups, H0 was
rejected and Ha was accepted.
More negative mean change indicated more effective information content. It was found
that social focus information content caused the largest negative change on desirability

8 Since the scale ranges from -100 to +100, this percentage change is calculated by:
(New desirability – old desirability)/200 * 100%
58
of a new smartphone, followed by all-round focus, which caused slightly smaller impact
on desirability. Commercial focus content was the least effective among these three
groups, resulting in about half the effect of social focus content.
60 % change on New Smartphone Desirability (DV1: Attitude)
40
20
-20
-40
-60
-80
-100
Consumer Focus Social Focus Commercial Focus All-round Focus
Q1 Min Median Max Q3

desirability of a new smartphone.

Figure 16 is a boxplot showing the distribution of responses in the sample. All of the
boxes were positioned below 0. Therefore, it implied that most respondents in all groups
(around 75%) expressed decreased desirability after learning information on planned
obsolescence.
These findings provide implications for pro-environmental parties to determine what

information content to use to educate consumers so that consumers’ desirability of new
smartphones can be reduced. By reducing desirability, the likelihood to purchase is
reduced too, thus creating consumer pressure on smartphone manufacturers. For
example, in a society where consumption rates are soaring as in Parkard’s description of
the U.S. in the 50s, discouraging consumers from overly replacing products are
important in order to cut waste and pollutions. As discussed in literature review, the
desirability of a new product may arise from psychological obsolescence. In other words,
people maybe only psychologically tempted to replace products while technological and
economic factors play a smaller role in inducing purchase. In this scenario, if a party
59
(government or environmentalist) steps in by educating consumers of planned
obsolescence by emphasizing the social loss, such as environmental damage, harm
caused to the less privileged, their desirability towards a replacement can be reduced, as
supported by the result here.
60
4.4.2 Effect on Willingness to Pay (DV2: Values)
Table 8: Results showing the effect of information content on willingness to pay
Information Content

IV1: Consumer Focus

IV2: Social Focus
WTP of a New Smartphone: -£27.00 -£57.67 -£30.88 -£56.19
information
p-value 0.0065 0.0232 0.0087 0.0009
(one-tailed t-test for –ve direction)
Rank of effectiveness 4th 1st 3rd 2nd
H0: Consumers’ exposure to information increases or does not change willingness to pay
Ha: Consumers’ exposure to information decreases willingness to pay
In table 7, the mean change on WTP of a new smartphone (values) after presentation of
information was presented in pounds (£). It is evident that all groups showed a decrease
in WTP after learning information on planned obsolescence. Moreover, all decreases
were statistically significant at 95% confidence level, i.e., p-value was smaller than 0.05.
H0 was rejected and Ha was supported in all groups.
More negative change in WTP (£) meant more effective information content used.
Results showed that social focus content was the most effective, followed by all-round
information content, which had slightly smaller impact than social focus content. Both of
them caused more than £55 decrease in WTP of a new smartphone. The third and least
effective ones were commercial and consumer focus content respectively. Their impact
was about half of the impact compared to social and all-round focus content.
61

500 £ Pounds change on Willingness To Pay (DV2: Values)
400
300
200
100
-100
-200
-300

willingness to pay.
Figure 17 is a boxplot showing the distribution of responses in all groups. Again, it could
be seen that all boxes lies below 0. That means, at least 75% of respondents in each
group had their WTP decreased after learning the information on planned obsolescence.
Besides, by comparing the box, it was clear that the boxes of social and all-round focus
were more negative than commercial and consumer focus ones. Despite the presence of
outlier in social focus group, social focus group still remained the most effective
information content on mean WTP change.
There are implications for pro-environmentalist again. By educating consumers of

planned obsolescence, consumers’ values on a new smartphone can be changed as
supported by the findings here. This creates consumer pressure to press firms either
lower the price or abandon the use of planned obsolescence, so that customers value
their products more. Undoubtedly the latter approach is the desired outcome of this
research. Since it was found in exploratory and descriptive research that consumers
valued continuous software support and repairability very much, smartphone
manufacturers may go on finding out how much do consumers value these attributes
thus they may sell more durable smartphones at a higher price. By providing these
benefits, consumers’ WTP will likely increase as a result.
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4.4.3 Effect on Anticipated Years of Use (DV3: Behaviour)
Table 9: Results showing the effect of information content on anticipated years of use of the
new smartphone
Information Content

IV1: Consumer Focus

IV2: Social Focus
Anticipated Years of Use of a New -0.19 +0.01 +0.11 -0.11
Smartphone: years years years years
information
p-value 0.9920 0.4909 0.1811 0.8867
(one-tailed t-test for +ve direction)
Rank of effectiveness - - - -
H0: Consumers’ exposure to information decrease or does not change the anticipated
years of use
Ha: Consumers’ exposure to information increases the anticipated years of use
In table 9, the mean changes on anticipate years of use of a new smartphone after
presentation of information content were presented in number of years. Unfortunately,
none of the results were statistically significant at 95% confidence level, i.e. p-value was
larger than 0.05. We failed to reject the null hypothesis in all experiment groups. Their
mean changes were also trivial (less than 0.2 years) in all groups. This meant that
information on planned obsolescence almost did not impact their anticipated years of
smartphone use at all. In the groups of consumer and all-round focus content, they even
showed results in the opposite direction as hypothesized. It could not be determined if
any information content could cause any impact on the anticipated years of use on
consumers.
63

3 Years change on Anticipated Years of Use (DV3: Behaviour)
-1
-2
-3

anticipated years of use of a new smartphone.
Figure 18 is a boxplot showing the distribution of responses. Only commercial focus

content group showed a more positive change, which was consistent with the alternative
hypothesis. Other groups did not show any obvious increases. After all, these findings
were not statistically significant and we could not conclude any causation based on the
findings here.
Since there was not any significant finding, the implications to pro-environmental
parties may be to first find out what are the very factors that influence consumers’
anticipated years of using a smartphone. It appeared that educating consumers of
planned obsolescence was not an effective way in order to encourage consumers to use a
smartphone for a longer period.
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5 DISCUSSION
5.1 Consumers Recognize Planned Obsolescence as Undesirable
Do consumers recognize planned obsolescence as an undesirable practice in product
category where there is continuous innovation? This is the first research question. By
evaluating the above findings, we can conclude that the answer is: Yes, they do. It is
evident in their overall decreased attitude and decreased WTP (except for attitude
change when consumer focus is used).
5.2 Consumers More Value Social Loss than Their Own Loss
When phrasing the impact of planned obsolescence as consumers’ loss, their decrease in
attitude and values were either small or negligible. By contrast, by phrasing the impact
as a social loss, which included damage to the environment and to people in developing
countries, their decrease in attitude and values were significantly more obvious. This
phenomenon provides a few implications.
Consumers did not blame planned obsolescence for its impact on themselves. The fact
that they replace their smartphones was mostly upon their control and wills. It appeared
that their own enjoyment of technological advance was worth the price of planned
obsolescence caused to themselves, which included the price of new smartphone,
reduced resell value, lower upgradability and repairability and being out-of-fashion.
Realizing these impacts caused no significant decrease in their attitudes, and only slight
decrease in their values. Therefore, to answer the question: do consumers desire
longevity in these innovating products? The answer is they only slightly desire longevity
or they are indifferent to longevity.
By contrast, consumers blamed planned obsolescence for its impact on the environment
and on the less privileged. Compared to losses to consumers themselves, it appeared that
they valued losses to the environment and other people more than losses to themselves.
Enjoyment of technology might not be worth sacrificing the well being of the others.
Therefore, referring back to the first research question: do they recognize that planned
65
obsolescence in innovating products is undesirable? The answer is: yes – especially after
they learn the social loss caused by planned obsolescence.
5.3 More Information Does Not Render Greater Influence

In addition to the above understandings, the impact of all-round information focus
(educate consumers as much information as possible) was slightly smaller than social
focus information. It implied that the provision of more information did not lead to more
significant impact, but just similar degree of impact as reflected in the results. Therefore,
choosing the right information content to educate consumers of planned obsolescence
could be more efficient. It is especially important for instance in developing advertising
campaign that educates consumers, where very short time is available to convey a
message.
5.4 Way Forward: Creating Consumer Pressure

Finally, given that educating consumers could cause decrease in attitude and values
towards innovating products, it could be used as a way to create consumer pressure
against firms who overuse planned obsolescence. By educating consumers and drawing
consumers’ attention on the social impact caused by irresponsible firms, consumers tend
to dislike their products on and place lower values on those products. Thus, they might
buy from other manufacturers who are more ethical instead. Their exercise of consumer
sovereignty is effective to pressure firms to be more responsible for social well being.
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5.5 Limitations
There are a few limitations in this research.
In terms of experiment sampling, the sample size was small and samples were not
stratified. In order to articulate a more general understanding on consumers’ response to
planned obsolescence information in the whole population, samples have to involve
more people of different age, income and education levels for example. A larger sample
size will also produce more convincing results and reduce non-systematic errors.
This research might have low external validity. Since consumers’ attitudes, values and
behaviour could vary greatly across different cultures, different economies and different
product categories, the ability to produce generalized findings was very limited and often
require separate experiments. The current research here only studied smartphone as the
only product category to represent the product area where continuous innovation took
place. Furthermore, findings were mainly collected from individuals in Hong Kong and
United Kingdom and thus may not be applicable to other product categories and
geographical locations.
Moreover, this experiment was scenario based, where respondents only provided
responses by estimation and anticipation. The use of an imagined company and
imagined phone might affect the findings compared to real practices. There were biases
as well. For example, respondents may also fall into self-serving bias to indicate
responses that make them feel they were an ethical person in order to maintain their
self-esteem. If this experiment were to be repeated, researchers might consider using
real-life scenario and perform the experiment in real life settings, where time and money
can be measured rather than estimated or anticipated.
The current research studied planned obsolescence in an area where continuous

innovation is present. This area lacked in-depth understanding in existing literature. As
discussed, there were significant advantages to use planned obsolescence, for example,
assist technological progress. Having products with too long durability are undesirable
as system lock-in may happen. The optimal durability model might not well fit in this
product category with ongoing innovations in reality. The current research was only
assuming the basics of the model is applicable to smartphones as well.
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5.6 Strengths
Despite the weaknesses, there were also strengths in this research.
This research was very focused on one product category: smartphone. Respondents in
the sample were also relatively homogeneous and are mostly 21-25 years old living in
Hong Kong. If experiment is to be repeated within the smartphone category and within
this social group, findings here may very likely hold true. Besides, smartphone being a
very typical electronic product with continuous innovation, it was well understood by
respondents.
The internal validity was high. Respondents were asked to rate a parameter once and
rate it again immediately after learning planned obsolescence information. Any changes
between the two responses were extremely likely to be caused by the information
presented to them, as this was the only factor that was manipulated throughout the short
course of the experiment. This added support to the causal relationship concluded in the
findings.
As a pilot research, this experiment provided initial insights on consumers’ response to

planned obsolescence in product area where there were ongoing innovative
improvements. It tested which information content would be effective in educating
consumers so that one possible use of this research is to create consumer pressure
against manufacturers who overuse such a practice.
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6 CONCLUSION
This research attempted to study consumers’ response to planned obsolescence
information. It yielded findings in two sections.
First, in descriptive research, it was found that consumers’ need for novelty in
smartphone was relatively small. Consumers also highly valued continued software
support as well as repairability if the phone breaks. Most of the consumers did not resell
their used smartphone and almost all consumers preferred owning a smartphone than
renting one. When it came to responsibility on environmental impact created by e-waste,
consumers recognized that both manufacturers and consumers were responsible while
more of the responsibilities should be born by manufacturers. Last, e-waste was seen as a
more important issue in developed countries than developing countries.
In causal research, different information content on planned obsolescence were tested to

compare their relative effect on consumers’ attitude, values and behaviour. It was found
that, social focus information on planned obsolescence could cause the most decrease in
consumers’ desirability of a new smartphone as well as their WTP for a new smartphone.
The second most effective one was all-round information content, which caused slightly
smaller impact on desirability and WTP. Commercial focus content also decreased
desirability and WTP for a new smartphone, but to a less extent compared to social and
all-round focus information.
In general, it was discussed that consumers were only slightly opposed or they were
indifferent to planned obsolescence in innovating products, as long as the impact only
caused their own losses. However, when their attention was drawn on social losses, they
showed significant negative attitude and decreases in values towards innovating
products. It proved that the choice of information content matters in affecting
consumers’ feelings on planned obsolescence. This provided insights for pro-
environmental parties that they may create consumer pressure by educating consumers
of planned obsolescence using social focus information. This consumer pressure may
discourage smartphone or other electronics manufacturers from overusing planned
obsolescence.
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This research was distinct from other literature regarding planned obsolescence as it
studied a product with ongoing innovations, focused on competitive market and focused
on consumers rather than discussing the optimal durability from a firm’s perspective.
Previous literature placed much emphasis on durability choice on monopolies, efficiency
and so on, but mostly ignored the pressing social and environmental problems. This
research attempted to put existing knowledge into actionable marketing plans, which
was by using consumer pressure to contribute to lessening these problems. It is
suggested that, future research may also translate the voluminous literature on planned
obsolescence to real practices that marketers may use in order to facilitate and encourage
more sustainable business practices. Apart from information content, as suggested by
Guiltinan (2009), information sources, framing and timing may be useful in formulating
marketing strategies that discourage overuse of planned obsolescence too.
70
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Waldman, M. (1996). Durable goods pricing when quality matters. Journal of Business ,
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74
APPENDICES
Appendix 1: Full Qualtrics Survey
University of Manchester
Manchester Business School
Ethical Approval
Information Sheet
Research title
Electronic gadgets consumption
Researcher
Donald KAM, postgraduate student at Manchester Business School
Purpose
This research serves to contribute to an experiment in a dissertation project.
Procedure
You will be presented with a series of questions on your electronic gadgets consumption
attitudes and behaviour. In any case you experience difficulty or discomfort, you may
skip and proceed to the next question.
Withdrawal
Your participation in this research is completely voluntary. You may opt out of the
research at any time.
Compensation
This research is non-compensated.
Confidentiality
All responses are collected and treated anonymously and will be used in this current
research project only.
For questions: hoyi.kam@postgrad.mbs.ac.uk
If you are happy to participate in the study, please complete the consent form below:
(PLEASE CLICK ON BOTH BOXES TO AGREE)
By clicking the '>>' (next) button, you agree to participate in this research. This research
will take around 5 minutes to complete.
CONSENT FORM
o I confirm that I have read the attached participant information sheet and have had the opportunity to
consider the information and ask questions, and had these answered satisfactorily.
o I understand that my participation in the study is voluntary and that I am free to withdraw at any time
without giving a reason and without detriment to any treatment/service.
75
Notes:
The sequence of these options was randomized, while each time only one random option
was displayed. It was used to randomly allocate respondents to one of the subsets in the
experiment.
There are 3 short pages in total. Some questions involve descriptive text that takes time
to read. Your patience is very much appreciated.
o I am ready. (leads to subset 1)

76
FIRST PAGE
Suppose you are currently using a smartphone produced by Sonntag Co., an

(imagined, non-existent) electronic company.
Today, Sonntag Co. released a new, upgraded version of the smartphone.
77
How much do you desire this new Sonntag smartphone?
(Regardless of price or any telecom contracts)
If you decide to buy this new smartphone, how many pounds (£) are you willing to pay?
(GBP * 12 = HKD)
(Reference: Assume Apple iPhone 5S costs GBP400 /HKD4800)
If you decide to buy this new smartphone, by foreseeing, how many years will you use
this phone until you want to buy another one?
(assume it does not totally break down)
78
SECOND PAGE
Suppose you encounter the below information from the news:
Notes:
Only one of the subsets is shown to any one respondent.
Subset 1: Consumer Focus
'Some manufacturers are said to have smartly shortened the service life of mobile
phones.
Tactics include:

3. Consumers feel out-of-fashion with their old gadgets.'
79
Or Subset 2: Social Focus
phones.
Tactics include:

(Discarded mobile phones become e-waste, which contains heavy metals and chemicals)
2. Developing countries receive more e-waste from affluent countries.
(These countries earn money by extracting metals (eg. Copper) from e-waste, but e-waste
could damage citizens' health and cause diseases)
(When phones are not compatible with current software)'
Or Subset 3: Commerical Focus
phones.
Tactics include:

2. Firms regularly release new models such that customers keep paying them.
(Second-hand phones may compete with new phones, this allows them to reduce competition from
second-hand market)'
80
Or Subset 4: All-round Focus
phones.
Tactics include:

3. Consumers feel out-of-fashion with their old gadgets.

(Discarded mobile phones become e-waste, which contains heavy metals and chemicals)
5. Developing countries receive more e-waste from affluent countries.
(These countries earn money by extracting metals (eg. Copper) from e-waste, but e-
waste could damage citizens' health and cause diseases)
(When phones are not compatible with current software)
8. Firms regularly release new models such that customers keep paying them.
(Second-hand phones may compete with new phones, this allows them to reduce competition from
second-hand market)'
81
Please rate again:
How much do you desire this new Sonntag smartphone?
(Regardless of price or any telecom contracts)
Please rate again:

If you decide to buy this new smartphone, how many pounds (£) are you willing to pay?
(GBP * 12 = HKD)
(Reference: Assume Apple iPhone 5S costs GBP400 /HKD4800)
Please rate again:

If you decide to buy this new smartphone, by foreseeing, how many years will you use
this phone until you want to buy another one?
(assume it does not totally break down)
82
LAST PAGE
Please indicate how much do you agree to each statement. (10 in total)
Related to product improvement:
Related to consumption:
Related to e-waste (electronic waste):
83
Age
o 18-20
o 21-25
o 26-30
o 31-35
o 36 or above
o Prefer not to say
Gender
o Male
o Female
o Prefer not to say
Nationality
o British
o Other EU & non-EU countries in Europe
o PRC
o Hong Kong
o Others
o Prefer not to say
Country of residence at the moment

o United Kingdom
o China/ Hong Kong
o Others
o Prefer not to say
Please click '>>' to submit your response. Thank you for participating. Long live your
gadgets!!!
84
Appendix 2: Data Sets for Causal Research
Causal Research
Date of Before: Before: Before: After: After: After:
Response Submission Subset # Desirability WTP Use Years Desirability WTP Use Years
1 5/29/15 14:02 1 60 533 1.6 20 470 2

2 5/30/15 15:01 4 51 488 2 -1 400 1.8
3 5/31/15 3:26 3 30 317 1.5 -20 245 1
4 5/31/15 13:10 3 20 430 2 -5 333 2
5 5/31/15 13:14 2 -50 279 3 -60 289 4
6 5/31/15 13:19 3 20 348 2 -30 324 2
7 5/31/15 13:39 4 31 200 1 10 150 1
8 5/31/15 13:58 1 40 449 2 11 424 2
9 5/31/15 14:09 4 50 408 2 50 408 2
10 5/31/15 15:09 1 0 193 3 -16 202 3
11 5/31/15 15:18 3 -24 328 0.9 -29 328 0.9
12 5/31/15 15:18 1 -50 549 3 -80 400 3
13 5/31/15 15:26 1 -22 363 3 -44 300 3.1
14 5/31/15 15:36 3 10 252 3 10 249 3
15 5/31/15 15:41 3 -100 200 2 0 200 4.7
16 5/31/15 15:57 2 70 544 2 -15 356 2
17 5/31/15 16:45 3 -22 301 1.6 21 200 1
18 5/31/15 17:55 4 0 281 3 0 281 2.9
19 5/31/15 19:34 3 10 255 1.9 11 247 2
20 5/31/15 23:48 4 5 351 2.5 -20 301 2
21 6/1/15 2:56 4 70 413 1 70 428 1
22 6/1/15 8:09 1 -48 499 2 0 402 1.5
23 6/1/15 8:17 1 0 451 3 0 451 3
24 6/1/15 13:21 4 0 250 2.5 -40 180 3
25 6/1/15 13:33 1 25 517 3 -5 478 2.5
26 6/1/15 14:01 3 -67 452 3 -79 436 3
27 6/1/15 14:55 4 30 302 2 0 201 2
28 6/1/15 15:05 3 -70 263 3.4 -63 287 3.5
29 6/1/15 15:07 1 -51 430 4 -48 402 4.1
30 6/1/15 15:25 2 65 420 1.5 16 425 2
31 6/1/15 16:06 1 -50 500 2 -50 500 2
32 6/1/15 16:12 2 -10 475 2 -30 415 1
33 6/1/15 18:16 2 21 403 1 14 403 1
34 6/1/15 22:03 2 17 401 1.5 12 495 2
35 6/2/15 5:39 4 -25 392 3 -59 312 2.6
36 6/2/15 7:57 3 31 398 2 48 410 2
37 6/2/15 9:24 2 -62 400 1 0 400 1
38 6/2/15 13:22 3 0 302 1 -44 302 1.7
39 6/2/15 14:03 2 19 313 1.9 -30 720 2.1
85
40 6/2/15 14:08 4 0 282 2 8 292 1.8
41 6/2/15 14:09 3 50 350 3 -40 301 2.5
42 6/2/15 14:21 3 -50 480 3 -70 419 3
43 6/2/15 14:26 4 40 408 4 36 333 3.5
44 6/2/15 14:51 2 85 355 3 -30 201 5
45 6/2/15 15:08 1 11 293 2.1 8 298 2
46 6/2/15 15:10 4 32 400 3 0 320 3
47 6/2/15 15:11 4 50 455 2 50 455 2
48 6/2/15 16:09 4 -52 306 2 -56 199 2.5
49 6/2/15 16:43 2 -50 450 3 -80 350 3
50 6/2/15 22:15 3 3 506 2 -30 310 2
51 6/2/15 22:30 4 10 / 2 0 / 3
52 6/3/15 6:33 1 35 / 1 35 / 1
53 6/3/15 12:01 1 81 201 2 80 149 1.5
54 6/3/15 14:37 4 / / 2 / / 2
55 6/3/15 14:47 2 15 400 2 0 348 2
56 6/3/15 14:50 2 0 219 3.5 -30 142 3
57 6/3/15 14:52 3 45 396 3 -38 278 2
58 6/3/15 14:55 1 / 547 2.5 / 545 2.5
59 6/3/15 15:05 4 31 504 2 41 639 1.1
60 6/3/15 15:37 1 -100 149 1.5 -100 99 1
61 6/3/15 16:27 4 50 500 2 -100 251 1
62 6/3/15 18:12 1 10 260 2 20 200 1.5
63 6/3/15 18:26 1 30 501 2 -23 454 2
64 6/3/15 21:16 2 77 439 1.6 -69 207 1
65 6/3/15 21:49 4 18 360 1 10 230 1
66 6/3/15 22:10 2 -47 218 3.1 -16 224 3.1
67 6/3/15 22:26 1 75 520 3 75 500 3
68 6/3/15 22:46 1 0 500 2.5 45 400 1.5
69 6/4/15 0:05 4 -40 400 2 -72 265 2
70 6/4/15 1:34 3 -72 300 3 -100 200 4
71 6/4/15 2:24 2 55 632 3 41 560 2.1
72 6/4/15 3:51 2 -48 400 1.9 -1 291 0.8
73 6/4/15 5:39 4 10 333 2 -50 98 1
74 6/4/15 8:16 4 100 / 3 100 / 3
75 6/4/15 9:25 3 0 189 2 0 200 2
76 6/4/15 10:52 3 -10 300 4.1 -50 245 5
77 6/4/15 13:53 3 9 500 2.5 3 500 3
78 6/4/15 14:28 2 31 302 2 -20 205 2.5
79 6/4/15 14:33 1 5 298 4 3 298 4
80 6/4/15 15:12 3 / / 2 / / 2
81 6/4/15 15:15 1 -39 441 2 -46 467 2
82 6/4/15 15:17 4 -36 321 2.6 -60 319 2.5
86
83 6/4/15 15:26 2 10 330 2 0 329 1.5
84 6/4/15 16:00 3 -50 420 2.5 -50 420 2.5
85 6/4/15 16:10 1 55 415 3 -25 483 2.3
86 6/4/15 16:34 2 40 501 4 -50 300 2
87 6/4/15 17:20 4 100 283 2 75 283 1.5
88 6/4/15 17:54 2 50 500 2 50 400 4
89 6/4/15 23:30 1 -24 345 3 -38 301 3
90 6/5/15 0:15 1 15 408 2 5 379 2
91 6/5/15 0:17 3 74 204 0.8 95 342 1
92 6/3/15 14:36 4 0 697 3 0 588 3
93 6/3/15 15:59 4 25 451 2.2 0 346 1.5
94 6/5/15 3:33 4 -62 405 3.4 -68 400 3.3
95 6/5/15 8:27 3 -49 301 1.5 -47 253 1.5
96 6/5/15 14:11 3 0 400 3 0 400 3
97 6/5/15 17:13 4 23 251 1.5 0 249 1.5
98 6/5/15 20:22 2 / / / / / /
99 6/6/15 14:18 3 20 348 2 -21 340 1.7
100 6/6/15 14:28 4 29 469 2.5 -7 521 3.5
101 6/7/15 5:40 1 -1 401 2.5 7 401 2.5
102 6/7/15 5:56 3 58 628 3.1 53 596 3
103 6/7/15 13:00 1 -99 0 2 -100 85 0.8
104 6/7/15 16:10 2 / 329 3 / 325 3
105 6/7/15 16:12 2 / 400 / / 199 /
106 6/7/15 17:19 4 / / / / / /
107 6/7/15 17:44 2 39 601 / 25 343 /
108 6/7/15 18:59 2 -13 200 2 -16 200 2
109 6/8/15 9:42 3 / / 2.5 / / 2.5
87

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Planned Obsolescence in

A dissertation submitted to The University of Manchester for the degree of

Manchester Business School

LIST OF FIGURES ........................................................................................................................... 5

INTELLECTUAL PROPERTY STATEMENT .................................................................................................. 7

INTELLECTUAL PROPERTY STATEMENT

3) Further information on the conditions under which disclosures and exploitation

‘Fast-tech’ products as the thousands of product categories that improve so

Several questions arise. Is it socially desirable to put an expiry date on smartphone, as

a transparent, interactive process by which societal actors and innovators become

Planned obsolescence is an example of irresponsible innovations in a broader context.

1.4 Trend on Sustainable Consumption

1.5 Purpose of Research

1.6 Focus on Planned Obsolescence in Smartphones

1.7 Values of Current Research

1.8 Research Outline

After that, findings and interpretations at each stage are demonstrated.

1.9 Research Questions

2.1.1 Kinds of Planned Obsolescence

Parkard (1960) noted that obsolescence of function (i.e. technological obsolescence) is

2.2.1 Time Inconsistency

2.2.2 Different Discount Rates between Owners and Producers

2.2.3 Network Externalities

2.2.4 Antitrust Policy

2.3.1 Parkard’s Classic Complaint

There were numerous examples. Motorcars manufacturers shortened engine lifespan.

2.3.2 Waste Generation is Not Sustainable

2.4 Optimal Durability

2.4.1 Purchasing Durable Goods as an Investment Decision

However, Swan’s claim of the independence on market structure included some

Nevertheless, Swan’s contribution, although being refuted by later scholars, provided

2.6 Secondary Market

2.6.1 Information Asymmetry

2.7.1 Continuity and Incremental Innovation

If the change or improvement is only evolutionary, it does not cause breakthroughs in

The technological progress of a typical continuous innovation can be demonstrated by

Technological progress involves knowledge accumulation and competence enhancing. It

2.8.1 Planned Obsolescence is Necessary for Technological Advancement

2.8.2 Planned Obsolescence Improves Product Quality in Other Dimensions

However, having discussed this approach of delayed return, planned obsolescence is an

2.8.4 Replacement is Necessary for Improvements

2.8.5 System Change is Slow if Things are Too Durable

This is especially worth noticing in product areas undergoing continuous innovations. It

2.9 Guiltinan’s Call for Contributions

3.2 Descriptive Research

A full version of the Qualtrics survey can be found in appendix 1.

It is important to understand the characteristics of the surveyed population so that it

Related to product improvement:

3.2.4 Data Collection

3.2.5 Data Analysis

A full version of the experiment in Qualtrics survey can be found in appendix 1.

3.3.2 Sampling & Data Collection

3.3.3 Pilot Test

b) After Information Presentation

companies, which might affect their responses.

Information contents were divided into four categories:

a) Consumer Focus Content (IV1)

It is called planned obsolescence, which causes:

It is called planned obsolescence, which causes:

It is called planned obsolescence, which causes:

d) All-round Focus Content (IV4)

H0: Exposure to information increases or does not change desirability

It was hypothesized that exposure to information about planned obsolescence would