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.     

Retailers,don't ignore me on social media! The importance of consumer-brand interactions in raising purchase intention - Privacy the Achilles heel

Effective interactions are essential for retail brands to progressively nudge consumers towards purchase. While social media provides the platform for brands to directly connect with consumers, it is critical that brands take privacy concerns seriously. This paper address common questions retailers ask: How do brands develop effective interactions with consumers on social media? Do consumer-brand interactions impact purchase intention? Does privacy matter? Through 541 UK participant responses and using social exchange theory, this research examines consumer-brand interactions on social media, focusing on how social media activities, attitudes towards social media advertising, and privacy, impact upon purchase intention. Our results show that brands must establish strong relationships through high-quality consumer-brand interactions to significantly raise purchase intentions, while also carefully managing consumers' privacy expectations. Effective privacy management positively mediates the link between social media and purchase intention but ignore privacy, and it becomes the Achilles heel of the relationship.     

Consumer acceptance of delivery drones in urban areas

The concept of drone usage for commercial purposes by retailers worldwide is still in its early stages, and unheard of in Pakistan. Moreover, research on consumer perceptions regarding commercial drones in Pakistan and around the world is very sparse. The purpose of this paper is to gauge the level of acceptability and concerns Pakistani consumers may have in accepting the drone delivery technology. This study offers new insights that retailers and delivery companies can use to penetrate target markets in early stages. The authors have executed a quantitative analysis through the means of a survey. A sample of middle‐ and upper class residents of two cities in Pakistan was selected on which purposive sampling technique was applied. A total of 307 responses were collected and these responses were analysed in SPSS. Various analysis techniques were applied including Cronbach’s alpha, the Pearson correlation analysis, regression analysis and cluster analysis. The results show that consumers in Pakistan perceive privacy issues as a primary concern in relation to drone delivery. The results also throw light on the profile of consumer segments that can be targeted by retailers who may desire to use the drone delivery technology in the near future. Using these findings, retailers using the drone delivery mechanism can address consumer’s fears and ambiguities. Retailers can resolve consumer concerns by designing pro‐privacy parameters in the initial service design stage and the infrastructure deployment of drones.     

Marketing analytics using anonymized and fragmented tracking data

With the digitization of the retail industry, there is a growing abundance of event-based tracking data describing consumer behavior (e.g., online clickstreams and offline sensors tracking the movement of shoppers). However, stronger data privacy regulations and the growing privacy consciousness of consumers suggest that much of the data may increasingly only be available to retailers in an anonymized and fragmented form that does not identify individual consumers exactly. In response to the relative paucity of research on marketing analytics in retailing using anonymized and fragmented event-based (AFE) tracking data, this paper makes three interrelated contributions. First, we describe the relevance of AFE data in the future of retailing, contrasting it with other forms of aggregate and individual-level data. Second, we propose a methodology for analyzing AFE data, which allows us to approximately recover individual-level heterogeneity and derive meaningful variables from the raw data. Third, we validate the methodology using representative data collected by deploying sensor-enabled shelves in a field experiment within a store. We find that our approach to analyzing AFE data can help uncover interesting patterns of consumer behavior and could be applied across other online and offline retail settings in practice.     

Trustmarks: Strategies for exploiting their full potential in e-commerce

Internet-based commerce has undergone explosive growth over the past decade and is expected to keep growing. With the increasing popularity of online marketplaces, trust is seen as a key foundation for consumers’ willingness to purchase, in particular, from unknown sellers. While trust has been examined in various contexts, limited focus has been placed on the importance of displaying institutional trust assurances such as trustmarks on retailers’ websites. We conducted two studies into how the use of trustmarks impacts consumer trust, consumer risk perceptions, and, consequently, influences consumer purchase intentions. The results of the two studies suggest that the use of trustmarks increases consumer online trust and purchase intentions, as well as reducing their perceived risk. We use these results to inform managerial decision making in e-commerce, particularly for marketers and e-retailers. We provide three important managerial lessons to be learned from our insights. Our implications are important not only for mature e-commerce markets to create a competitive advantage but also for growing and emerging e-commerce markets, where new retailers are trying to establish trust among their consumers to increase market share.     

Motives and barriers affecting consumers’ co-creation in the physical store

ABSTRACT

The rise of e-commerce has caused a dramatic shift in consumer behaviour, putting pressure on physical stores to offer a more personalised and service-oriented offering. This paper investigates one strategy retailers might apply in this context: in-store consumer co-creation. Research has predominantly focused on online-based consumer co-creation in new product and service development. We argue that with increased focus on digitalisation and consumer experiences in physical retail, this type of co-creation will increasingly take place in-store. Following a pre-study with practitioners, our main study uses 20 scenario-based semi-structured interviews, where we identify eight consumer motives and seven barriers that underlie consumers’ willingness and reluctance to create and select new products in-store, respectively. Some motives, such as ethical, self-efficacy, and concerted are reported as barriers when reverted, due to consumers’ concerns regarding data privacy, low levels of perceived self-efficacy and assumptions that the technology might be flawed. Other motives largely overlap existing research on motives for co-creation whereas other barriers predominantly pertain to the underlying technology and the physical setting of co-creation in-store. The findings further indicate that consumers co-create differently online versus in-store. In-store seems particularly suitable for more marketing related aspects of co-creation, with a stronger emphasis on playfulness and purchase intentions. Practical implications for retailers are therefore discussed.     

The Effect of Product Innovation,Promotion, and Price on Consumer Switching to Private Labels

The channel conflict that exists between retailers and manufacturers of branded products has dynamically shifted as large retailers have expanded their offerings of private label products. This study investigates the ability of consumer packaged goods companies to exert influence in the channel by testing which marketing initiatives implemented by manufacturer brands are more efficient in preventing consumer switching to private labels. We use a hazard model to simultaneously measure the effects due to product innovation, promotion, and price on consumer switching and how strong those effects are. We find that as expected product innovation, promotion, and price exert a negative effect on the consumer likelihood of switching to private labels. However, we find the strongest effect on promotion suggesting the importance of understanding how consumers perceive value in the national brands offer.     

Addressing privacy predicaments in the digital marketplace: A power‐relations perspective

The utilization and governance of the internet and adjacent disruptive technologies have created numerous challenges to ensuring consumer online privacy. This study employs the power–responsibility equilibrium theory to explore emerging online privacy issues in the data‐driven marketplace. This exploratory study, based on semi‐structured interviews, explains why online shopping consumers are increasingly worried about their privacy and why they behave in a manner that could be detrimental to the consumer–vendor relationship. The findings suggest that deficiencies of corporate privacy responsibility and regulatory protection have deprived consumers of privacy empowerment. These deficiencies have also accentuated perceived privacy contract violations to trigger privacy concerns and subsequent defensive responses. We identify enhancement of consumer privacy empowerment and assuagement of privacy contract violations as two separate mechanisms of addressing online privacy issues. We also highlight the importance of addressing power and responsibility dynamics for maintaining a healthy information‐exchange environment.     

Struggles in optimal labelling: how different consumers react to various labels for genetically modified foods

The labelling of genetically modified (GM) foods is an important policy issue, as consumers' attitudes towards these foods appear to be quite sensitive to information about their potential benefits and risks. Because it is difficult for labels to differ across consumers, differences in reactions to label information could lead to conflicts across consumer groups or to different market outcomes. Using factor and cluster analysis, we uncover three consumer segments with different attitudes to the risks and benefits of GM foods. Our segmentation‐based analysis on consumer reactions to information points out important differences across consumers. Not only did we find differences across segments in how they view the credibility of GM‐related information, we also find differences in how information influences segments' perceptions of the product, and in their likelihood to buy.     

Retail channel price discrimination

This paper examines price differentials of identical items across retail channels. Many consumer packaged goods are sold through both grocery and drug stores. Liquor is unique in that in much of the country there is a third retail channel of distribution, liquor stores. If consumers in each retail channel differ in their willingness to pay for certain items, then sellers can exploit those differences and charge different prices for the same items in each channel. We examine a unique data set of pooled cross sectional retail scanner data on wine to test whether sellers use retail channel to identify heterogeneous consumer market segments and engage in price discrimination. We begin by presenting a model of price discrimination by retail channel along with behavioural assumptions regarding shoppers in each channel. Next we examine sales by retail channel and find persistent price differentials for the same item across retail channel after controlling for sample selection bias and seasonality. Lastly, we estimate the price elasticity of demand correcting for endogeneity and find differences across channel consistent with the price differentials. The extent of price differential, however, differs significantly with respect to price point.     

THE IMPACT OF ORDER FULFILLMENT SERVICE ON RETAILER MERCHANDISING DECISIONS IN THE CONSUMER DURABLES INDUSTRY

Historically, manufacturers held the upper hand in consumer goods supply chain relationships. There has been a pervasive shift of power to retailers over the past 20 years, however, ushering in an era of waning consumer loyalty to manufacturers' brands and increasing loyalty to retailers. While there is extensive research focusing on the manufacturer‐consumer relationship, retailers' increased ability to influence consumer purchases suggests that manufacturers should understand not only consumer perceptions of delivery service, but also retailer perceptions. We incorporate social network theory to examine the manufacturer‐retailer‐consumer linkages in the consumer durables industry, with the emphasis on the retailer in the role of the “broker” (Burt 1992). Specifically, we examine whether retailer perceptions of a manufacturer's order fulfillment service (OFS) positively impacts retailer perceptions of the manufacturer's brand, the importance of the product, and the likelihood of the retailers' salespeople to recommend the product to consumers. The research bridges OFS and retailer purchase behavior in a consumer durables industry characterized by high levels of consumer involvement, brand presence, and personal selling.     

Reduce Content or Raise Price? The Impact of Persuasion Knowledge and Unit Price Increase Tactics on Retailer and Product Brand Attitudes

This research investigates consumer reactions to the practice of increasing unit prices of products by either reducing product content or increasing total prices. Using pricing tactic persuasion knowledge (PTPK) as a lens for understanding, I predict that total price increases garner less favorable attitudes toward retailers for relatively low PTPK consumers, while content reductions garner less favorable attitudes toward product brands for relatively high PTPK consumers. The results of an experiment with a nationally representative sample of U.S. consumers support these asymmetric predictions about PTPK consumer segments as well as expectations about the underlying psychological processes.     

Consumers’ privacy calculus: The PRICAL index development and validation

Although collecting personal information about consumers is crucial for firms and marketers, understanding of when and why consumers accept or reject information collection remains limited. The authors conceptualize a privacy calculus that represents a consumer’s trade–off of the valence and uncertainty of the consequences of the collection, storage, and use of personal information. For example, usage-based car insurance requires drivers to share data on their driving behavior in exchange for a discount (certain benefit) but at the risk of third parties intercepting location data for malicious use (uncertain disadvantage). Building on this conceptualization, the authors develop the privacy calculus (PRICAL) index. They empirically confirm the validity of the items (Study 1) and the index as a whole (Study 2). The PRICAL index is generally applicable and improves the explanation of behavioral intentions (Study 2) and actual behavior (Study 3), compared with currently used constructs (e.g., privacy concern, trust). Overall, the PRICAL index allows managers to understand consumers’ acceptance of information collection regarding financial, performance, psychological, security, social, and time-related consequences, which the authors demonstrate using the top five most valuable digital brands (Study 4).     

Brand switching in clothing: the role of variety‐seeking drive and product category‐level characteristics

The study explores the impact of internal factors such as variety‐seeking drive, loyalty, involvement, perceived risk, pleasure and similarity perceptions on brand‐switching propensity in clothing purchases using multiple regression. The model derived shows that five internal factors including involvement, perceived risk, loyalty and variety‐seeking drive have an impact on brand switching propensity. The findings highlight that highly involved and loyal consumers are likely to show brand‐switching propensities in their clothing purchases, thus buying from a repertoire of brands and stores. These findings imply that retailers should ensure that their clothing brands or stores are among those in the multi‐brand repertoire of the consumer.     

Conceptualising consumer regiocentrism: Examining consumers' willingness to buy products from their own region

The key objective of the study is to address the gaps by building a theoretically based conceptual model to examine the influence of consumer regiocentrism and its moderators, and community involvement on consumers’ willingness to buy products from their own region. A mail survey of 2000 consumers from the Western Australian metropolitan area, supported four of the five proposed hypotheses. The results revealed that consumer regiocentric tendencies and community involvement positively influenced consumers’ willingness to buy products from their own region. Community involvement was also found to positively influence consumer regiocentric tendencies. Although perceived product necessity moderated the relationship between consumer regiocentrism and consumers’ willingness to buy products from their own region, perceived economic/personal threat did not moderate the relationship between consumer regiocentrism and consumers’ willingness to buy products from their own region. The study offers several implications to public policy makers as well as strategic and communication managers of regional products and brands.     

Segmenting Markets Along Multiple Dimensions of Luxury Value: The Case of India

abstract

This is one of the first investigations of consumer motivations for purchasing luxury brands in India, a country with an emerging middle class. It identifies four dimensions of luxury benefits for segmenting markets. These include the financial, functional, personal, and social benefits of luxury value. Using data collected from 329 respondents in Mumbai the study identifies nine luxury factors for purchase behavior. These are used for classifying respondents into three behavioral segments using cluster analysis. The first segment appears to buy luxury goods primarily for their snob appeal, the second segment for their prestige appeal, and the third for their value appeal. The results show that while many consumers may buy the same luxury goods, their motivations for doing so differ. The findings should help marketers tailor their messages to specific luxury-seeking segments. There are many papers on luxury brands but very few are from emerging markets. The results may be of great use to global brands that are looking for expansion due to slowdown condition across globe.     

The Future of Private Labels: Towards a Smart Private Label Strategy

Modern day store brands (SB) or private labels (PL), now also popularly called private brands, are brands generally owned and marketed by retailers. They have been active on the market for about 70 years. Over this time span, these brands have evolved from generic, cheap, low-quality economy or budget private labels to lower-priced-than-national brand but acceptable-quality value or standard private labels. Over time, retailers extended the value proposition to the consumer segment seeking higher quality by offering premium private labels. This strategy, called the tiered-private label, comprises offering economy PL to the price-sensitive but not quality sensitive consumers, standard PL to mainstream consumers seeking acceptable quality at lower prices, and premium PL to the quality-sensitive segment seeking value. Over the last 40 years (1980–2020), these versions of private labels have witnessed substantial growth around the world, though the growth is said to be tapering in recent times.As retailers chart the future strategy for their private labels in 2020 and beyond, a pertinent question they face is: Should they continue to offer value or even tiered PL with the same formula that brought them success in the past, or should they morph and adopt new strategies in keeping with current market trends? We support adopting a new strategy that we call the smart PL strategy. The value PL strategy and its manifestation as the tiered PL strategy cater to different consumer segments but focus primarily on price and quality as attributes of choice. In the current marketplace, consumers care not only about price and quality, but also about sustainability, ethics, social responsibility, image, so forth, perhaps more so than earlier generations. They are also more tech-savvy in using digital tools for search and purchase. Retailers, on their part, are now endowed with rich, extensive data that they can tap into to understand customers’ diverse needs, and they are able to harness technology for developing the right product and communication. Thus, the smart PL strategy is a strategy by which retailers can leverage data and technology to market private labels that meet diverse customer needs and achieve greater retail differentiation, store loyalty, margins, and profits. This thought piece provides a road map for developing such a smart PL strategy and directions for future research.     

The role of Swedish retailers in food innovations

Innovations should create value for increasingly individualistic consumers with varying demands and for other stakeholders. Today, retailers have the power in the supply/value chain. This research investigates how Swedish food retailers view innovations, their role and that of customers and suppliers in the development process and how they see future development. The study is based on open-ended interviews. The results show that Swedish retailers regard food product innovations as something to provide to consumers rather than achieve with consumers. Retailers want more collaboration with packaging suppliers to differentiate. Retailers are successful in establishing their own brands, in becoming brands themselves and in competing with producer brands. This follows the UK model and may result in fewer alternatives in stores and fewer product – or new technology-based innovations by Swedish producers. Service innovations can still occur for retailers to retain consumer loyalty. Consumers demand more than new products; they want to be excited by the shopping experience. More innovations will require deeper insight about consumers, efforts from the value chain and from outsiders. Collaboration is needed to establish trust among supply chain actors.     

The Importance of Trust for Personalized Online Advertising

With the amount of online advertising on a steady rise, generic ads noticeably lose effectiveness. In order to break through the clutter, retailers employ a method called retargeting to tailor their advertisements to individual consumers based on inferred interests and preferences. However, while personalization should generally make ads more appealing, the authors use field data to show that the effectiveness of retargeting considerably hinges on consumers’ trust in a respective retailer. To uncover the underlying mechanisms of this phenomenon, they investigate how trust moderates the impact of ad personalization on consumers’ internal and external responses in the lab. They propose a two-dimensional conceptualization of ad personalization: First, a banner's personalization depth defines how closely the ad reflects a consumer's interests. Second, its personalization breadth determines how completely the banner reflects these interests. The lab results show that more trusted retailers can increase the perceived usefulness of their ads through a combination of high depth and narrow breadth of personalization without eliciting increased reactance or privacy concerns. On the other hand, for less trusted retailers, banners with higher depth are not perceived more useful, but instead trigger increased reactance and privacy concerns, regardless of their personalization breadth. These effects directly translate into consumers’ click-through intentions so that retailers should adjust their personalization strategies accordingly in order to increase the effectiveness of their online advertising.