Analyzing the impact of pay-later options purchase decisions

Abstract

Buy Now Pay Later (BNPL) 1s a popular micro-financing option allowing you to get instant credit for purchases. It allows the customer to purchase without worrying about paying immediately. The payback period is usually within 14 days. In this marketing research study, we are analyzing the impact of Buy now pay later options on purchase decisions for various sets of customers using the SOR model. The impact availability of BNPL options on purchase decisions, the formation of positive emotions like relief/delight with the availability of BNPL options, and how these positive emotions are converted into purchase intention are studied in this report. For this, we have conducted a focus study of 12 peers and a survey with 91 people from different demographic backgrounds. The data collected is analyzed to understand the relationships between the variables using SPSS. Statistical techniques such as t-test, ANOVA etc., are applied to summarize the data. This study identifies a strong positive correlation between the introduction of BNPL in a platform and the increasing purchasing tendency of customers. Managers who have not yet introduced the payment mode in their platform should strongly focus on the introduction of BNPL options. Research also shows that BNPL options increase the cart size and cart conversion rates, which closely adheres to the results obtained from the current research. Platforms that have already introduced BNPL options in their platform should focus on increasing the awareness of the option in their platform. They should introduce separate banner ads, pop-up notifications, etc., to communicate to the customers about the availability of the option and its benefits. The present research shows that male customers tend to utilize the BNPL options more compared to female customers. Managers can utilize the data stored in the databases to specifically target male customers and raise their awareness of the payment option. The limitation of this research is that the data used for this project was collected through conventional sampling techniques. Convenience sampling, however, is not a systematic, probability-based sampling process. The majority of the survey takers are IIMB students who have high potential future earnings. Hence our data might not be a good representation of the entire population. To conclude, we identified recommendations and strategic options in order to improve the sales performance of BNPL. Further studies may be done by conducting live experiments and immerse studies to understand better consumers’ behaviors.