Effects of online communication practices on consumer perceptions of performance uncertainty for search and experience goods

The “intangible” nature of e-commerce may cause shoppers to be uncertain about whether products ordered online will fit their needs or perform up to expectations. Such uncertainty is a dimension of consumer risk, or feelings that result because the actual outcome of a purchase decision can only be known in the future. However, the ability of e-retailers to offer a plethora of product-related information can ameliorate this uncertainty. This research assesses the influence of three online retailer communication practices—evoking vividness through pictures, allowing consumers to control information presentation, and presenting information from third-party sources. We demonstrate that these practices materially affect consumer perceptions of product performance uncertainty. Importantly, we also find that the influence of the practices differs by the search or experience orientation of the product, sometimes in counterintuitive ways. These results can serve to help enhance the effectiveness of e-retailers’ communications and, in the case of multichannel retailers, help determine which products are best suited for different channels.     

A comparison of online recommendation methods: Simultaneous versus sequential approaches

This study investigates the relative profitability of online recommendations (sequential or simultaneous) of durable goods used by various firms, such as Walmart and Amazon. To achieve this, we develop a utility model (specified in terms of product attributes) that captures the complementarity between the recommended products. To recover customers’ utility for simultaneous or sequential purchases of durable goods, we conduct incentive-aligned conjoint experiments in which participants select a combination of fully or partially complementary products. The results reveal that the product attribute associations are more noticeable for fully complementary product categories. In addition, customers tend to balance comparable attributes when buying durable goods sequentially over time, while they reinforce comparable attributes when buying simultaneously. The profit analysis based on the estimates shows that the recommendations for simultaneous purchases can yield higher profits for fully complementary product categories than for sequential recommendation purchases. However, the recommendations for sequential purchases generate higher earnings for partially complementary product categories than for simultaneous recommendation purchases. A simulation study reveals that the profits differ considerably by combinations of product attributes because customers evaluate complementarity among attributes differently between the two recommendations.     

Consequences of personalized product recommendations and price promotions in online grocery shopping

Shopping convenience can be turned into a competitive advantage for online grocery retailers. Consequently, we study how personalized product recommendations (recommendation agents) and price promotions (algorithmic pricing) compensate for the negative impact that consumer's perceived cognitive effort causes on loyalty. By default, the relationship from perceived cognitive efforts to attitudinal and behavioral loyalty is negative, yet these results demonstrate that personalized price promotions lessen the negative impact, while personalized product recommendations do not have such an influence. The findings contribute to a better understanding of personalized marketing activities in today's data-driven online grocery retailing.     

How Retailers’ Recommendation and Return Policies Alter Product Evaluations

This research investigates the interactive effects of retailers’ recommendations and return policies on consumers’ post-purchase evaluations of products which yield a mixed attribute performance. This article presents an account of the consumers’ post-purchase product evaluation process, in which counterfactual thinking plays a central role. Two studies show that consumers’ post-purchase evaluations of products, which yield a mixed attribute performance, tend to be more favorable under lenient return policies than under restricted return policies when retailers offer recommendations during the pre-purchase decision-making process, but more favorable under restricted return policies than under lenient return policies when retailers offer no recommendations.     

Does online observational learning matter? Empirical evidence from panel data

The information presented on a product sales page plays an important role in consumers' purchase decisions. This study examines the persuasive effect, whether a customer's choice is heavily driven by information inferred from others' behavior, and how these impacts are moderated by market age and product type. Results show that online customer choice was significantly affected by historical cumulative sales and times saved. Positive cumulative sales and shop service quality have a significant positive impact on product sales. The times saved have no direct impact on product sales. For different types of products, the times saved of experiential products has a significant impact on product sales, while the shop service quality information of search products has a greater impact on product sales. The influence of online observation learning on product sales will be significantly moderated by a combination of product type and market age. These findings not only offer important theoretical contributions to e-commerce research but also provide practical implications for online sellers and managers of social commerce platforms.     

Acceptance of recommendations to buy in online retailing

Nowadays, many online shops try to improve their customer service by personalization. Personal welcomings, individual assistance as well as recommendations to inform and buy are getting an integral part of the customer communication. These new elements are assumed to increase the retailer's share of wallet and – ideally at the same time – the customer's satisfaction with the online shop. However, till date only few studies have analyzed which external factors influence the customer's acceptance of such assistance. This paper closes this gap by an experiment, where a modified Technology Acceptance Model is used for measuring the customer's acceptance. Volunteers are offered an online shopping experience with individually generated recommendations to buy. The results show a high acceptance of the generated recommendations and how close this acceptance is connected to the quality and shopping relevance of the recommendations. Even though the results are limited to the specific recommendation types used, they give important implications for an adequate design of modern online shops.     

Effects of voice assistant recommendations on consumer behavior

The present study compares the influence of text-based recommendations; traditionally known as online consumer reviews, and the influence of voice-based recommendations provided by voice-driven virtual assistants on consumer behaviors. Based on media richness theory, the research model investigates how voice versus text modality influences consumers' perceptions of credibility and usefulness, as well as their behavioral intentions and actual behaviors. In addition, the study analyses if these relationships vary based on the type of product and compares the influence of masculine and feminine voices. Two studies were conducted using between-subjects experimental designs, partial least squares-structural equation modeling, and logistic regression. The core finding is that voice-based recommendations are more effective than online consumer reviews in altering consumer behaviors. In addition, the first study showed that the influence of recommendations on behavioral intentions is mediated by consumers' perceptions of their credibility and usefulness. The second study confirmed, in a realistic setting, that voice-based recommendations affect consumer choices to a greater extent. Recommendations for search products and provided by males are also found to be more effective. These results contribute to the voice assistant and e-WOM literature by highlighting the effectiveness of voice-based recommendations in predicting consumer behaviors, confirming that credibility and usefulness are key factors that determine the influence of recommendations, and showing that recommendations are more effective when they focus on search products.     

Cross-category effects of induced arousal and pleasure on the internet shopping experience

Online retailers are likely to try to influence consumers’ shopping behavior through atmospherics and service, just as physical stores do. The impact of online atmospherics can be measured by the degree of stimulation and pleasure that is provided by a website. It is suggested that the characteristics of products and websites that are encountered early in online browsing can significantly influence the level of arousal and pleasure that consumers experience, and thereby can influence their later shopping behavior. Two experiments show that if the initial experiences encountered in a simulated Internet shopping trip are higher in pleasure, then there is a positive impact on approach behaviors and subjects engage in more arousing activities (e.g., more exploration, more tendencies to examine novel products and stores, higher response to promotional incentives). Further, if higher stimulation or information load is provided by the initial Internet experience, then consumers subsequently tend to engage in less arousing activities.     

Product and process productivity: Implications for quality choice and conditional exporter premia

We develop a model of international trade with two dimensions of firm heterogeneity. The first dimension is “process productivity”, which is how we denote the standard concept of productivity as modeled in the literature. The second one is “product productivity”, defined as firms' ability to develop high-quality products spending small fixed outlays. The distinction between these two sources of productivity, together with the assumption that iceberg trade costs decrease with quality, delivers various conditional exporter premia as theoretical predictions. Conditional on size, exporters sell higher quality products, charge higher prices, pay higher input prices and higher wages, and use capital more intensively. Some of these predictions had already been documented in the empirical literature but lacked a theoretical framework for properly interpreting them. We conduct systematic tests of these predictions using manufacturing establishment data for India, the U.S., Chile, and Colombia, and find strong support for the model.     

Hedonic and utilitarian shopping goals: The online experience

Marketers offering Web-based shopping typically try to provide a convenient, safe, and pleasant online environment, appropriate to addressing shoppers' functional goals. They might also try to create an experience that encourages more escapist elements of “flow”, a sense of deep involvement that is intrinsically enjoyable, because they assume that this enhanced experience leads to more online buying. The present research suggests that utilitarian flow elements that facilitate shopping may indeed increase purchasing. However, hedonic elements of flow are found to be unrelated to online buying, although they are positively related to outcomes associated with pathological Internet use.     

Information processing and innovative choice

In this paper we examine how the information processing of subjects who make an innovative choice (innovators) differs from that of subjects who make a noninnovative choice (noninnovators). The task involves selection of an alternative within a range of prerated product category innovativeness. We propose that subjects who seek 1) impersonal/uncontrollable sources, 2) higher levels of information, 3) more detailed (versus summary) data, and 4) noncomparative (versus comparative) data are more likely to make innovative choices. The research method is a computerized process tracing experiment utilizing Search Monitor (Brucks 1988).The authors wish to express their gratitude to Merrie Brucks for the use of and help with Search Monitor and to Eric Johnson, Dave Schmittlein, and Mita Sujan for helpful comments on an earlier version of this paper.     

Do consumers who conduct online research also post online reviews? A model of the relationship between online research and review posting behavior

The purpose of the research is to investigate whether consumers who conduct online product research also more likely to post online product reviews. An information theory-based classification algorithm is used to estimate the likelihood of a consumer posting an online review conditional on having conducted online product research. Data from a nationally representative probability sample of American internet users are used to estimate the model. The results indicate that the characteristics of consumers who have a greater propensity to conduct online product research but a lower tendency to post online product reviews differ substantially from those who are more likely to post online product reviews but less likely to conduct online product research. The research is important because the degree to which consumers who conduct online product research are similar to those who post online product reviews can be used to track the effectiveness of online word-of-mouth marketing campaigns.     

The Impact of Search and Recommendation Systems on Sales in Electronic Commerce

The Internet and related technologies have vastly expanded the variety of products that can be profitably promoted and sold by online retailers. Furthermore, search and recommendation tools reduce consumers’ search costs in the Internet and enable them to extend their search from a few easily found best-selling products (blockbusters) to a large number of less frequently selling items (niches). As a result, Long Tail sales distribution patterns emerge that illustrate an increasing demand in niches. We show in this article how different classes of search and recommendation tools affect the distribution of sales across products, total sales, and consumer surplus. We hereby use an agent-based simulation which is calibrated based on real purchase data of a video-on-demand retailer. We find that a decrease in search costs through improved search technology can either shift demand from blockbusters to niches (search filters and recommendation systems) or from niches to blockbusters (charts and top lists). We break down demand changes into substitution and additional consumption and show that search and recommendation technologies can lead to substantial profit increases for retailers. We also illustrate that decreasing search costs through search and recommendation technologies always lead to an increase in consumer surplus, suggesting that retailers can use these technologies as competitive advantage.     

Avoiding a “me” versus “we” dilemma: Using performance management to turn teams into a source of competitive advantage

Teams are pervasive in today's world of work. Unfortunately, in many cases teams do not live up to their promise and, instead, lead to disappointing results. In this installation of Human Performance, we discuss how to design and implement performance management systems that include a good combination of both “me” and “we” considerations. We offer the following research-based recommendations: (1) use measures of individual and team performance, (2) use measures of processes and outcomes, (3) develop performance measures using input from inside and outside the team, (4) gather performance information using sources from inside and outside the team, (5) foster team learning and development, and (6) reward both individual and team performance. We discuss implementation guidelines for each of these recommendations that will help maximize individual and team performance as well as alignment among individual, team, and organizational goals. Implementing performance management systems following our recommendations will help organizations turn teams into an inimitable and sustainable source of competitive human capital advantage.     

What beliefs underlie decisions to buy groceries online?

Online grocery shopping has become increasingly popular in many countries due to Covid-19. Although there is plenty of research on consumer adoption and use of online grocery shopping, only a few studies focus on understanding the underlying beliefs of experienced buyers. Using the Theory of Planned Behaviour and following its recommendations, the present study set out to explore the actual beliefs that underlie attitudes, subjective norms and perceived behavioural control to buy groceries online among those who have been doing it regularly for a longer time. A structured qualitative approach, in this case an elicitation study, was applied to uncover the shared ideas, modal salient beliefs, among a group of experienced buyers (n = 14). The study found that time-saving and convenience, which for many meant avoiding the discomfort of in-store shopping, combined with assisted meal planning and simultaneous ordering were considered important for experienced online shoppers. This suggests that further assistance in the planning to order process may be welcome, including more proactive prompts and suggestions. The quality of perishable goods was still a concern after months of online shopping, along with a limited product range, which for some had meant less variation in meals. Suboptimal user interface and delivery-related inflexibility caused some concern. Retailers in the grocery business stand before major capital expenditure if they wish to expand their online offerings and services. The study at hand provides valuable initial insight into what drives consumer behaviour in this respect.     

Shaping consumer preference using alignable attributes: The roles of regulatory orientation and construal level

The structural alignment literature suggests that people place more weight on alignable (vs. nonalignable) attributes when evaluating competing options. The present research proposes that consumers' regulatory orientation moderates this process. Specifically, consumers differentially weight alignable versus nonalignable attributes depending on whether they are prevention or promotion-oriented. Results of four studies indicate that prevention-oriented consumers who tend to construe information at a more concrete level rely more on alignable attributes when evaluating two options as compared to promotion-oriented consumers who tend to construe information at a more abstract level, and are influenced more by nonalignable attributes. The authors further show that consumers' construal level and differential ease of processing the two types of attributes mediate the influence of regulatory orientations on their relative weighting of alignable versus nonalignable attributes and product evaluations.     

Online personalized recommended product quality and e-impulse buying: A conditional mediation analysis

Consumer lifestyle and purchasing behavior have been significantly transformed over the past few years. At present, internet technologies make it possible for consumers to order goods and services on a go or in real-time without physically visiting traditional store outlets. This phenomenon calls for a change in marketing strategy to be able to reach consumers wherever they are. Accordingly, online marketing techniques such as personalized product/service recommendation, which makes products available to consumers, optimizing their interests and buying experience, are primal to market development.Therefore, this study examines whether or not online consumers' (1) E-impulse buying (EIB) behavior is influenced by personalized recommended product quality (RPQ), (2) affective image (IMAGE) of, and satisfaction (SAT) with recommended products mediate the RPQ-EIB link, and (3) online review stimulus (ORS) moderated the direct RPQ-EIB and indirect PRQ-EIB through affective image and satisfaction. Data was collected from consumers on five (5) online shops in China (N = 947). The Results showed that (i) RPQ had significant positive influence on EIB, (ii) the RPQ-EIB relation was partly explained by consumers' affective image of, and satisfaction with recommended products, and (iii) the direct and indirect relations between RPQ and EIB were sensitive to consumers’ ORS. Theoretical and practical implications, limitations and direction for future studies were also discussed in this study.     

Coupons in context: discounting prices or decreasing profits?

A coupon is a commonly used sales promotion device offering the user a discount on the purchase of a product. Consumer coupon offerings are also becoming increasingly diverse: from “% off” and “$ off” to “Buy one, Get one free” (BOGO) offers and co-promotions (Buy X, Deal on Y). This paper reports the results of three experiments that examine whether the economic value of a coupon is a source of information to infer the price of the product/service, and the quality of the product/service, which inference can undercut the economic value, with resulting consequences for deal evaluations and purchase intentions. The framework predicts, and empirical results show, that increasing the value of the coupon does not always improve deal evaluations or purchase intentions. This could imply lower profits for the company. The presence of past price information about the brand, information about prices of other brands offered by the company, and information about competitors’ prices moderate the impact of coupon value on brand-related inferences. When such alternate sources of information are present and are diagnostic of the price of the promoted product, consumers are less likely to infer price and quality from the value of the coupon and higher coupon values are more likely to increase deal evaluations and purchase intentions. Implications for managers designing and communicating promotions are offered.     

On manufacturers complementing the traditional retail channel with a direct online channel

With the explosion of the Internet and the reach that it affords, many manufacturers have complemented their existing retail channels with an online channel, which allows them to sell directly to their consumers. Interestingly, there is a significant variation within product categories in manufacturer's use of the Internet as a direct distribution channel. The main objective of this study is to examine the strategic forces that may influence the manufacturer's decision to complement the retail channel with a direct online channel. In particular, we are interested in answering the following questions:

1. Why is it that in some markets only a few firms find it optimal to complement their retail channels with a direct Internet channel while other firms do not?
2. What strategic role (if any), does the direct Internet channel serve and how do market characteristics impact this role?

To address these issues we develop a model with a single strategic manufacturer serving a market through a single strategic retailer. In addition to the focal manufacturer's product the retailer carries products of competing manufacturers. Consumers in this market are one of two types. They are either brand loyal or store loyal. The retailer sets the retail price and the level of retail support, which impact the demand for the manufacturer's product. The retailer's decisions in turn depend on the wholesale price as well as the Internet price of the product if the manufacturer decides to complement the retail channel with an online channel. Our analysis reveals that the optimality of complementing the retail channel with an online channel and the role served by the latter depends critically upon the level of support that the retailer allocates to the manufacturer's product in the absence of the online channel. The level of support allocated by the retailer, in the absence of the online channel, depends upon the retail margins on the manufacturer's product relative to that on rival products in the product category. When the size of the brand loyal segment is small relative to the size of the store loyal segment then in the absence of the online channel, the manufacturer can lower wholesale price and enhance retail support, especially when the retail margins on the rival products are low. In contrast, when the size of the loyal segment is large and the retail margins on rival products are high the manufacturer will find it more profitable to charge a high wholesale price even if that induces the retailer to extend low levels of support. If the manufacturer decides to complement the retail channel with an online channel, some consumers who would have purchased from the retailer might prefer to purchase online. Our analysis reveals that when consumers' sensitivity to price differences across the competing channels exceeds a certain threshold it is not optimal for the manufacturer to complement the retail channel with an online channel. However, this price sensitivity threshold itself depends upon product/market characteristics, suggesting that manufacturers seeking to complement their retail channels with an online channel should look beyond the nature of threat the online channel poses to the retail channel in devising their optimal distribution strategies. When the retail margins on rival products are sufficiently small, complementing the retail channel with an online channel when optimal allows the manufacturer to price discriminate and enhance profits. In contrast when retail margins on rival products are sufficiently high, complementing the retail channel with an online channel serves to enhance retail support. We also identify market conditions under which profits of both the manufacturer and the retailer are greater with the online channel than that without it. This is particularly interesting since the online channel competes with the retail channel.