price as a variable in online consumer trade offs-v4
TRANSCRIPT
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Price as a variable in online Price as a variable in online consumer trade-offsconsumer trade-offs
Ted Karlesson and Christer Kuttainen, Leyland Pitt, Stavroula Spyropoulou
Presenter: Jessie LiuPresenter: Jessie LiuInstructor: Dr. Pi-Ying HsuInstructor: Dr. Pi-Ying HsuDate: October 8, 2012Date: October 8, 2012
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CitationCitation
Karlsson, T., Kuttainen, C., Pitt, L., & Karlsson, T., Kuttainen, C., Pitt, L., & Spyropoulou, S. (2005). Price as a Spyropoulou, S. (2005). Price as a variable in online consumer trade-offs. variable in online consumer trade-offs. Marketing Intelligence & Planning, 23Marketing Intelligence & Planning, 23(4), (4), 350-358.350-358.
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ContentContent
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Introduction
Literature Review
Methodology
Result & Conclusion
Reflection
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IntroductionIntroduction
Motivation
Purpose of the Study
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IntroductionIntroduction
Local Store:Local Store:
Immediate availability
Local demand
Online Vendor:Online Vendor:
Delivery time
Guarantee availability
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Lower PriceLower Price
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IntroductionIntroduction
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CostCostTimeTime DistanceDistance
! ! !
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Availability
Price
Service
Assortment
Delivery costs
MotivationMotivation
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-- To identify the extent to which lower To identify the extent to which lower prices can motivate online purchasing, prices can motivate online purchasing, and the effect of other offering and the effect of other offering attributes on the trade-offs that attributes on the trade-offs that customers makecustomers make
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Purpose of the studyPurpose of the study
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Literature Review
Very little is known about the trade-offs consumers are willing to make when making online purchase.
(Odekerken-Schroder & Wetzels ,2003)
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Literature ReviewWheel of Retailing theory
(McNair, 1958)
When a new form of retailing, enters the market, it begins by offering lower prices and accepting lower margins by offering fewer services.
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Literature ReviewThe effect of communications technology on markets is to make them more efficient. So if the Internet as a communication technology makes markets more efficient, the one might expect prices to arise where customers' translation cost are lowered.
(Downes & Mui,1998)
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Literature ReviewWhile the dollar price reflects the direct monetary outlay by the buyer, the extended price refers to the time cost of the consumer incurred by searching and waiting, as well as risk associated with the purchase.
(Talaga & Tucci, 2001)
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How important a motivator is price in online purchasing environments to customers where other factors are also considered in the decision making?
Does the relative importance of price differ between online and physical channels for a particular product bundle?
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MethodolMethodologyogyParticipant . Procedures
Data Analysis
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ParticipantParticipantRespondents consisted of
undergraduate business and engineering students at a large
Swedish university.
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Likert ScaleLikert Scale
Question Totally agree Agree Undeci
ded Disagree Totally disagree
1. My mom will be a good rapper.
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Conjoint Analysis
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Price
Buyback policy
Ease of returns
In-stock status
Accessibility
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Attributes Attribute levels - Online
Attribute levels - Offline
Price 500 SEK550 SEK600 SEK
500 SEK550 SEK600 SEK
Buyback policy Will not buy backWill buy back, but no price guaranteeGuaranteed 250 SEK
Will not buy backWill buy back, but no price guaranteeGuaranteed 250 SEK
Returns policy Cash refundStore / Site credit
Cash refundStore / Site credit
Delivery time Cash refundStore / Site credit
Cash refundStore / Site credit
Place for delivery(online only)
Home
Distance to bookstore(offline only)
500 m10 km
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Data analysis
SPSS
Discrete regression model
Pearson’s R Kendall’s T
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Result & Result & ConclusionConclusion
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Attribute Mean importance per cent Level Part-worth
utilityPrice (SEK) 35.47 500
550600
1.36620.0101-1.3763
Returns policy 9.36 Money back for unused bookUnused book can be exchanged for another book
-0.3617-0.3617
Delivery time 29.59 Two daysSix daysTen days
1.08330.1212-1.2045
Place for delivery 8.28 HomePostal office
0.3201-0.3201
Buyback policy 17.30 Will not buy backWill buy back, but no price guaranteeGuaranteed 250 SEK buy back price
-0.67930.0215
0.6578
5.5177 Constant
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35%
9%
27%
8%
19%
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Attribute Mean importance per cent Level Part-worth
utilityPrice (SEK) 22.25 500
550600
0.67380.2845-0.9583
Returns policy 6.77 Money back for unused bookUnused book can be exchanged for another book
0.2482-0.2482
Delivery time 25.37 In stockIn stock in six daysIn stock in ten days
1.0071-0.1536-0.8536
Distance to bookstore
26.73 500 m10 km
0.9804-0.9804
Buyback policy 18.89 Will not buy backWill buy back, but no price guaranteeGuaranteed 250 SEK buy back price
-0.6262-0.1333
0.7595
4.8702 Constant
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22%
7%
25%27%
19%
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ConclusionConclusion
Online shoppers are “bargain-seekers”.
Customers expect prices to be lower in an online environment that in a traditional sales channel.
Respondents are willing to make aneffort to purchase online in order to obtain price savings.
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To assume that online stores would always be “in-stock”, this is clearly not the case in reality.
The customers’ satisfaction has a direct and positive effect on customer intention to return.
Originality- it is also an important factor to effect on trade-offs that customers make.
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Thank you for Thank you for your your
listening!listening!
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