Exchange and refund of complementary products

A common dilemma a consumer faces during product return pertains to the decision of exchanging the product or obtaining a refund. This issue becomes even more salient for durable goods, when the initial purchase involves complementary products from different categories. This research examines consumer’s trade-off decision between returning and keeping complementary products by exploring various retail actions (using umbrella branded products (UBP)) and customer characteristics. We also investigate the trade-off between product exchange and refund when consumer returns a product. We find interesting extensions to past research wherein UBP are returned less and result in greater exchange than refund. Furthermore, an interesting caveat is that higher degree of complementarity between UBP intensifies the impact of various factors on exchange as opposed to refund of products. Implications for retail managers and sales teams are explored.     

Complementary Goods: Prices and Consumer Welfare Under Duopoly and Monopoly

We examine prices, profits, and consumer surplus for differentiated complementary goods under duopoly and a multi‐product monopoly. We find that little can be said about the relative magnitudes of prices of the components of a system of complementary goods under the alternative market structures. Although demand complementarity can lead to lower prices for either the primary or the secondary good under monopoly, both prices are not necessarily lower. The results unique to this paper are that, when two complementary goods form a system, the system price is unambiguously lower and consumer surplus and profits are higher under a multi‐product monopoly.     

Multichannel customer purchase behavior and long tail effects in the fashion goods market

The fast-paced growth of e-commerce is impacting the type and variety of products consumers purchase across channels. A commonly held theory, known as long tail theory, posits that online sales are less concentrated at the top of the sales distribution than offline sales, and that more variety is bought online, making the tails of the overall sales distribution denser with the growth of e-commerce. Most of the literature testing the long tail theory has focused on examining entertainment goods markets that do not require much physical examination, and has predominantly found results consistent with the theory. However, the magnitude and antecedents of the observed long tail effects might be different for product categories containing products that require more physical examination before purchase, such as fashion goods. In this study, using detailed individual and transaction level panel data from two multichannel fashion goods retail brands, we show that while the shift to the online channel results in a decrease in the concentration of overall sales for both brands, this change mostly results from consumers buying different products online rather than consumers buying a greater variety online compared to offline. We show that the flattening of the overall sales distribution with the growth of e-commerce in our data is driven by consumers sorting their purchases into channels based on product characteristics. In contrast to the recommendations from the previous long tail literature, our results show that fashion apparel retailers do not need to offer broader assortments online compared to offline, but they may find it profitable to carry or emphasize a different product mix online compared to offline. Our results also provide guidance to fashion goods retailers in curating their online and offline assortments and setting inventory management strategies across the channels.     

Country-of-origion effects:an Australian experiment in shelf labelling

The influence of country-of-origin (COO) on consumers' preferences and purchase choices has been extensively discussed in the marketing literature yet most studies dedicated to this issue have relied on durables purchases. Questionnaire-based surveys have most often aimed to identify the degree to which the COO factor influences purchase intentions, but have in general presented this factor in isolation from other product attributes. The present study attempts to address these limitations by relying on ‘real world’ conditions and exploring COO effects for fast-moving consumer goods (FMCG). For two categories of grocery product, ‘Australian-made’ labels were displayed according to an experimental design over a period of several weeks. No significant effect was found, suggesting that the ‘patriotic’positioning strategy followed by many Australian marketers and retailers is somewhat misguided. These findings also suggest that previous research with durable goods, which supported the existence of COO effects, may not be applicable to the FMCG category where COO effects may be less significant.     

The Impact of Mobile App Adoption on Cross-buying: The Moderating Roles of Product Category Characteristics and Adoption Timing

With more and more companies introducing mobile apps and consumers using them during the purchase journey, it is increasingly important to understand the consequences of app adoption on behavioral outcomes. This paper investigates the impact of app adoption on the number of additional products purchased by customers (i.e., cross-buying) and how this effect varies across different product categories and different customers. We focus on two key product category characteristics (utilitarian vs. hedonic nature and perceived risk) and on adopters who vary in their adoption timings (early vs. late adopters). Using data from an online retailer and a combination of propensity score weighting with difference-in-differences and Heckman correction estimation techniques, the results show that app adoption has a positive effect on cross-buying overall, but the effect varies greatly across products and consumers. App adoption promotes additional product purchases for hedonic products but leads to less cross-buying for utilitarian products. In addition, early adopters purchase a higher number of additional product categories than late adopters, with this difference decreasing over time and for new consumers compared to existing customers. These results offer novel insights into the behavioral consequences of app adoption and provide managers with useful recommendations for improving the effectiveness of their mobile app investments.     

Second-Hand Markets and Intrasupply Chain Competition

We consider a monopolistic supply chain consisting of a manufacturer and a retailer (service provider) who in addition to selling new durables, buy and resell used ones. The supply chain provides services for both new and used goods. Accordingly, consumers incur service charges for all types of goods. This study is motivated by the modern trend in cell phone businesses where retailers commence buying used phones from customers willing to upgrade their phones. The used phones are then refurbished and resold along with the services. The question that this trend gives rise to is how the interaction with the secondary market affects the performance of the supply chain in terms of its intracompetition and thereby its profit. We show that for a wide range of service rates, the second-hand market coordinates the supply chain by either reducing the double marginalization effect or by offsetting it with extra profits gained by servicing the used goods. This, however, does not imply that both parties always improve their profits. Furthermore, we find that when the service rates are low, the supply chain would be better off if the goods were not durable thereby precluding the very existence of the second-hand market.     

Does Online Information Drive Offline Revenues?: Only for Specific Products and Consumer Segments!

While many offline retailers have developed informational websites that offer information on products and prices, the key question for such informational websites is whether they can increase revenues via web-to-store shopping. The current paper draws on the information search literature to specify and test hypotheses regarding the offline revenue impact of adding an informational website. Explicitly considering marketing efforts, a latent class model distinguishes consumer segments with different short-term revenue effects, while a Vector Autoregressive model on these segments reveals different long-term marketing response.We find that the offline revenue impact of the informational website critically depends on the product category and customer segment. The lower online search costs are especially beneficial for sensory products and for customers distant from the store. Moreover, offline revenues increase most for customers with high web visit frequency. We find that customers in some segments buy more and more expensive products, suggesting that online search and offline purchases are complements. In contrast, customers in a particular segment reduce their shopping trips, suggesting their online activities partially substitute for experiential shopping in the physical store. Hence, offline retailers should use specific online activities to target specific product categories and customer segments.     

How important is the strategic order of product attribute presentation in the non-life insurance market?

Sales management plays an important role in firms' profit. Its main goal is to determine the best time to present insurance customers with prices, insurers, bundling strategies, and the intermediary's recommendation.In this study, a triangular approach was used. For attribute selection, three focus groups were performed with insurance customers and intermediaries. Conjoint analysis was carried out by presenting the attributes in three different orders.Primacy and recency effects were detected; a transfer or anchor effect was also found related to the importance of the attributes preceding and succeeding a given attribute.According to the findings, salespeople can improve their approach to customers by decreasing the importance given to price and increasing the positive impact of bundling strategies and the intermediary's recommendation in sales.Although the order of attribute presentation has previously been analyzed, this is the first study to examine this issue in non-life insurance products, providing useful information to insurance salespeople and marketing managers for a better understanding of insurance customers’ buying decision process.     

Customer-centric pricing: The surprising secret for profitability

Companies spend enormous amounts of energy and capital in creating value for customers, but less regard is given to actually capturing the value they have created. Segmentation based on buying behavior uncovers a tremendous differential in willingness to pay for subjective product attributes such as convenience, status, and quality. Purchase decisions are made through an assessment of a myriad of factors balancing perceptions of value components against price in a subtle, complex, and often sub-conscious decision matrix. Customer-centric pricing requires the simultaneous and continuous assessment of product attributes, customer perceptions, and the circumstances of time and place by listening to customers' actions. It is a means of assuring that companies assess the value they create for customers and extract that value from the marketplace.     

Shopping plans,buying motivations,and return policies: impacts on product returns and purchase likelihoods

Product return behavior and factors that contribute to product returns are an under-researched area, despite significant importance to manufacturers and retailers. The current research attempts to fill the gap by focusing on two factors that shape consumer purchase behavior: (1) whether purchases are planned or unplanned, and (2) whether hedonic or utilitarian motivations drive purchases. The findings show that purchase plans and buying motivations have distinctive and interactive impacts on pre-purchase concerns, self-estimated likelihood of returning purchases, and purchase intentions with or without return policies. When hedonic motivation drives purchases, unplanned (vs. planned) purchases lead to higher return concerns, higher return likelihood, and lower buying intentions. When utilitarian motivation drives purchases, planned and unplanned purchases have comparable return concerns, return likelihood, and buying intentions. This interaction effect on buying intentions dissipates when a lenient return policy is offered.     

A purchase decision support model considering consumer personalization about aspirations and risk attitudes

Ranking alternative products to help consumers make better purchase choices is a valuable research topic. Most previous decision support models cannot be well applied to heterogeneous consumers. This paper focuses on establishing a personalized interactive model to assist consumers make better buying decisions with less effort. For the alternative products provided by consumers, we collect online reviews and parameter configurations of alternative products and then obtain the fusing evaluative information. As consumers are dominated by bounded rationality, they only provide partially key attribute weights, based on which, we construct an optimizing model to obtain the optimal attribute weights of customers for products. Then, a satisfaction function is proposed by uniting aspiration levels and risk attitudes of consumers and a compensatory decision rules is established to rank and recommend the brands to consumers. Finally, practicability of this study is illustrated with a real car purchase case. Through the case study, it can be seen that the proposed decision support model generates a personalized list of alternatives based on consumer's own utility function about risk attitudes, aspiration levels, and preferences for product attributes, which further confirms that the proposed model can capture the personalized needs of consumers. Theoretical and managerial implications of this model as well as advantages are further illustrated.     

Bundling products to success: The influence of complementarity and advertising

This study investigates the strategic influence of product complementarity and advertising on the success of bundling products. We use a profit maximization model to show that when a firm sells bundled products, both the product complementarity and advertising significantly impact the performance of bundled products. The bundling strategy with advertising can help firm achieve higher performance than the bundling strategy without advertising. However, the price discount to the identical products must be attractive to customers and the degree of product complementarity to the complementary products must be large enough, and then the bundling strategy with advertising can obtain a success in the market. Furthermore, our results also show that when the degree of the complementarity between two products increases, firm should invest less on advertising to promote the bundled products. Based on our results, we propose optimal marketing strategies for firms to adopt. Firm managers can utilize our findings to plan their bundling strategies wisely.     

Retail Market Power in a Shopping Basket Model of Supermarket Competition

Supermarket retailers typically operate with relatively low margins, suggesting a highly competitive retail environment. However, despite the fact that consumers purchase an entire shopping basket at a time from supermarkets, this evidence is largely based on models of retail competition with single-category purchases. In this paper, we develop and test an empirical model of retail price competition that explicitly accounts for the effect of demand complementarity among items in consumer shopping baskets. Relative to the case where consumers purchase products with independent demands, we demonstrate that equilibrium prices are higher for all items when retailers take demand-complementarity into account. Our findings indicate that non-price strategies intended to encourage complementarity, such as co-merchandising, strategic shelf-positioning, or featuring complementary goods tend to soften price competition, and lead to higher equilibrium prices.     

Durable Goods and Switching Costs

A simple two–period switching cost model is developed and analyzed assuming durable output. The analysis indicates that many of the conventional managerial implications of the switching cost literature need not hold if products are durable. In particular, the model indicates that managers of durable goods firms that lease or rent output may wish to decrease their customer base (provide service to only a subset of the experienced customers) in future periods, in contrast to the non–durable goods case where the number of customers served is the same. Moreover, the model shows that the optimal behavior of sellers of durable products depends critically upon their commitment ability with buyers, and outlines the conditions under which a manager selling output may rationally expand their customer base (i.e. sell to new customers in a future period).     

Comparing sustainable consumption patterns across product sectors

In this paper, we present findings from two qualitative studies where we explored sustainable consumption practices through examining consumers' information search and decision-making processes for recent purchases of five categories of goods/services: fast moving consumer goods (such as foodstuffs and household products), white goods (such as fridges and washing machines), small electrical products (such as TVs and computers), green energy tariffs (such as electricity from renewable sources) and tourism (such as flights). This research has provided us with a set of rich data which explores the nature and extent of sustainable consumption practices across different product sectors. A comparative analysis has allowed us to draw out patterns of consumer behaviour for different product and service types. Our findings suggest that even the same green consumer will not use the same information sources or decision-making criteria, consider the same options or focus on the same industry actors, for products in different sectors. However, we have identified some degree of consistency in purchases within sectors. We present these sector-specific patterns of consumer behaviour and highlight differences in the criteria utilized and the research norms in each sector.     

An exploration of the standardization of targeting strategies and the use of promotional disciplines on the web: A cross-national study

This study examines how leading corporations standardize their regional sites from the integrated marketing communication (IMC) perspective. In terms of standardizing targeting strategies, data show that many leading brands view the online audiences as one mass. Customers and media are the two most targeted and standardized stakeholders for all brands and in each of the product categories (i.e. non-durable goods, durable goods, and service). This study also reveals that financial communities/investors, communities, and channel members are the other three most targeted and standardized stakeholders, even though their rankings are somewhat different across the product categories. Employees, government regulators, and special-interest groups are seldom targeted through corporate websites. In terms of standardizing promotional disciplines on the web, advertising is the most standardized, followed by customer relations, direct marketing, public relations, and sales promotions for all brands and each product category. As a whole, service brands have the highest standardization mean, while durable goods rank second and non-durable goods are last. The three product categories do not significantly differ in terms of the standardization of promotional tactics. A Web Standardization Model is developed to be compatible and comparable to Moriarty and Duncan's Standardization Model.     

Consumer willingness to pay across retail channels

Published research examining differences in consumer willingness to pay for products at omnichannel and pure-play online retailers is based on non-durable, search products and is equivocal; prices at pure-play online retailers are not always lower. This research examines differences in consumer willingness to pay for online purchases of functional and expressive products that differ in the length of product life, i.e. durable and nondurables at omnichannel versus pure play online retailers. Empirical analysis of consumer-centric, multi-site clickstream data of prices paid show that consumers are willing to pay higher prices for home goods products at omnichannel retailers compared to pure-play online retailers but differ for functional and expressive products. Implications are drawn to assist both omnichannel and PPO retailers in their pricing strategies.     

Offline and Online Search in Used Durables Markets

This study examines how different information sources are used by consumers prior to their purchase of used durable goods, specifically used cars. We examine how online and offline search are related. Categories of online sources are dealer websites and resale websites, and of offline sources are print media and dealer visits. Prior research on new car purchases finds that online sources substitute for traditional, offline sources such as dealer visits. We examine whether this theory extends to used-car purchases and distinguish between dealer websites and resale websites (a distinction relevant to used-goods markets) by collecting data from a sample of used-car buyers. Because search in different sources can be interrelated, and due to data censoring, we build and estimate a simultaneous equations Tobit model. In contrast to existing research, we find that online search on dealer websites is complementary to and not a substitute for dealer visits. This complementary effect highlights the importance of dealers’ web presence in used markets.     

Brands as substitutes for the need for touch in online shopping

This article addresses the potential of reputable brands to overcome the lack of tangibility that characterizes the process of e-commerce through an experiment-based analysis. In a sequential argument, the authors propose that (1) the brand becomes more important in online than in offline channels, as a consequence of the intangibility or lack of physical contact in online purchasing processes; (2) the limitations associated with the need for touch and the lack of access to the physical product during the buying process does not have equal importance across all product categories and (3) the role of the brand in online channels thus is more relevant if the product category is associated with a higher need for touch. The study based on the experimental design reveals that leading brands enjoy an advanta in consumers' quality assessments, regardless of the objective attributes that characterize the products. This advantage may be greater in online channels, though only for product categories for which the lack of physical contact with the product during the purchase process is an important limitation. In such cases, brand associations can compensate for intangibility during purchase.     

农村居民选择超市或集市购买的决定因素与比较——来自全国28个县(市)1308名农村居民的调查

农村居民选择超市或集市购买的决定因素对"农改超"和"农超对接"具有重要意义。本文对全国28个县(市)的1308位农村居民进行随机调查,研究结果表明,农村居民既选择农村集市又选择超市购买产品,但农村居民选择两者购买的意愿及其影响因素、感知程度等存在显著差异。农村居民选择集市或超市购买的共同决定因素包括产品质量可靠性和购买便利性;不同的决定因素体现为,农村居民选择在集市购买主要取决于购买文化与习惯,而选择在超市购买则取决于超市销售服务水平,这种决定因素的差异导致农村超市与传统集市互补共存。