Evaluating Consumer Behavior, Decision Making, Risks, and Challenges for Buying an IoT Product

Home appliance manufacturers have been adding Wi-Fi modules and sensors to devices to make them ‘smart’ since the early 2010s. However, consumers are still largely unaware of what kind of sensors are used in these devices. In fact, they usually do not even realize that smart devices require an interaction of hardware and software since the smart device software is not immediately apparent. In this paper, we explore how providing additional information on these misunderstood smart device features (such as lists of sensors, software updates, and warranties) can influence consumers’ purchase decisions. We analyze how additional information on software update warranty (SUW) and the type of sensors in smart devices (which draw attention to potential financial and privacy risks) mediates consumer purchase behavior. We also examine how other moderators, such as brand trust and product price, affect consumers’ purchase decisions when considering which smart product option to buy. In the first qualitative user study, we conducted interviews with 20 study participants, and the results show that providing additional information about software updates and lists of sensors had a significant impact on consumer purchase preference. In our second quantitative study, we surveyed 323 participants to determine consumers’ willingness to pay for a SUW. From this, we saw that users were more willing to pay for Lifetime SUW on a smart TV than to pay for a 5-year SUW. These results provide important information to smart device manufacturers and designers on elements that improve trust in their brand, thus increasing the likelihood that consumers will purchase their smart devices. Furthermore, addressing the general consumer smart device knowledge gap by providing this relevant information could lead to a significant increase in consumer adoption of smart products overall, which would benefit the industry as a whole.