The effects of mobile promotions on customer purchase dynamics

While mobile promotions have become increasingly popular in recent years, limited research has examined the effects of mobile promotions over time. This research investigates the effects of two popular types of promotional offers, price discount and non-price free sample coupons, on purchase behavior. To this end, we present a dynamic model of customer purchase behavior that incorporates time-varying effects of mobile coupons, enabling us to investigate both the short-term and longer-term effects of mobile promotions. Using transaction and mobile promotion data, we find that both price discount and free sample coupons increase customers' purchase likelihood and expenditures during the coupon redemption period. We also find that free sample coupons have an enduring effect that increases the purchase propensity beyond the promotion period, thereby contributing to incremental purchases over a longer period of time. We demonstrate how our approach can help marketers improve mobile couponing decisions by considering the dynamic effects of mobile promotions that manifest over time.     

Customer Satisfaction and Elapsed Time since Purchase as Drivers of Price Knowledge

This study investigates the influence of customer satisfaction and elapsed time since purchase on customers’ explicit and implicit knowledge of price. The results of two large, independent surveys of customers who purchased a consumer durable good indicate that customer satisfaction and elapsed time have different effects on explicit versus implicit price knowledge. Customer satisfaction has a negative impact on explicit price knowledge, but no substantial effect on implicit price knowledge. The length of time between purchase and retrieval of the price information has a negative impact on explicit price knowledge but no substantial effect on implicit price knowledge. Finally, customer satisfaction has a moderating role, in that the higher the customer satisfaction level, the stronger the negative impact of elapsed time on explicit price knowledge.     

Price Consciousness and Purchase Intentions for New Food Products: The Moderating Effect of Product Category Knowledge when Price Is Unknown

This study examines the degree to which consumers' price consciousness affects their purchase intentions for a newly introduced product when the price of the product is unknown. Based on data from 186 consumers exposed to a new product offering, the results show that price consciousness indeed has a negative effect on purchase intentions, but only for consumers with a high level of product category knowledge. Although perceived risk and perceived value are significantly related to purchase intentions in general, price consciousness seems to affect only those consumers who make inferences about price based on their knowledge of the product category. Both theoretical and managerial implications of the findings are offered.     

Share of wallet in retailing: the effects of customer satisfaction, loyalty cards and shopper characteristics

In retailing, consumers typically patronize multiple outlets. Thus, an important issue is why consumers vary in how they divide their purchases across outlets and how outlets can get a greater share of consumer expenditures. Two potential avenues for increasing customer share are to raise customer satisfaction, and increase repeat purchase through loyalty cards. This study examines the effects of customer satisfaction and loyalty cards as well as consumer characteristics on customer share spent on the primary grocery store. The findings suggest that customer satisfaction has a positive, albeit modest, effect on share while consumer economic shopping orientation has a negative direct effect on share. The economic orientation of shoppers, their felt importance of a personal relationship with store personnel, and the level of their aggregate purchase volume moderate the effect of satisfaction on customer share. Finally, the results provide mixed support for the impact of loyalty cards on customer behavior.     

The effect of permanent product discounts and order coupons on purchase incidence,purchase quantity,and spending

This paper examines the influence of a permanent discount strategy on customer purchase behavior, i.e., purchase incidence in each week, purchase quantity (in units), and total order spending (in CNY). Permanent discounts are defined as discounts continuously provided by retailers. We identify two types of permanent discounts, namely, product-specific price discounts (PD) and order coupons (OD, which can be redeemed for a total order). We collect transactional data from a Chinese online retailer and empirically examine the effects of the two types of permanent discounts and customers’ expectations of PD and OD. We find nonlinear relationships between permanent discounts and customer purchase behavior. PDs negatively influence spending when they are lower than 19% but show a positive effect beyond this threshold, hence depicting a U-shaped relationship. They also affect purchase quantity positively but at a decreasing rate. Customer expectations of PD influence purchase incidence, spending, and purchase quantity following a U-shaped patter with a positive influence appearing when PD expectations are high than 31%, 27%, and 18% respectively. On the other hand, ODs influence spending and purchase quantity positively at an increasing rate. Customer expectations of OD influence purchase incidence, spending, and purchase quantity following a U-shaped relationship where the positive influence on purchase incidence shows beyond OD expectations of 426 CNY, and the positive effect appearing on spending and purchase quantity when these expectations are higher than 34 CNY. We also find that customer expectations of discounts interact with current discount levels in their influence on spending. Combining these results and considering that order coupons negatively affect the profit margin of the total basket, we suggest that retailers should offer order coupons with relatively low value but product-specific price discounts with high discount depth.     

Value‐driven Internet shopping: The mental accounting theory perspective

When faced with competition and the ease with which customers can compare prices across sellers, Internet vendors often lower prices in a bid to increase sales. However, recent research reports that even price‐sensitive customers do not always purchase from Internet vendors offering the lowest prices. In contrast, value has been considered a key motivator of customer decision making in economics and marketing. However, little is known about the role and effect of value in Internet shopping. This study examines online customer purchase decision making from the value perspective based on mental accounting theory. This study also identifies monetary (perceived price) and non‐monetary (perceived risk, convenience, and pleasure) determinants of value. This study further explains how the individual determinants affect online purchase decision making directly and indirectly though value perception. The findings of this study offer Internet vendors practical suggestions for increasing online sales. This study, with its results, also helps advance knowledge of electronic commerce. © 2009 Wiley Periodicals, Inc.     

Joint modeling of effects of customer tier program on customer purchase duration and purchase amount

Nowadays, many supermarkets implement a customer tier program to increase their profits because it is expected to raise customers' willingness to purchase by setting thresholds. However, designing an appropriate program is difficult because each customer's heterogeneous purchase behavior is difficult to capture. Therefore, we simultaneously modeled purchase frequency and amount through a marked point process approach while considering program effects and customer characteristics. The results clarified that the points pressure effect was particularly strong among customers who originally visited the store infrequently and had not attained the threshold set up in the customer tier program many times in the past. In addition, we found that the three-tier customer tier program was superior to the two-tier program with respect to the operating income in supermarkets.     

Customer defection due to service elimination and post-elimination customer behavior: An empirical investigation in telecommunications

Service industries require rapid innovations in their service portfolios to gain and maintain competitive advantages. Service elimination is a potential tool for portfolio renewal, though it might threaten increased defection rates. To contribute to both service elimination and customer defection literature, this paper proposes a model of customer responses to service elimination, with practical implications for decision-makers in rapidly innovating telecommunication markets.In particular, the main study, conducted in the context of Hungary’s telecommunications sector, reveals that customers’ tenure, usage intensity, and age reduce the negative effects of a price increase on their defection; the price increase, degree to which customers interact with service providers, customer defection, and competitive effects in turn increase post–service elimination usage intensity.These findings suggest implementation strategies that can reduce customer defection following price increase due to service elimination, by focusing on new customers, light users, and the quality of customer interactions.     

Is showrooming really so terrible? start understanding showroomers

The customer journey is more omni-channel than ever. In this scenario, so-called showrooming behavior emerges as a growing trend that is usually considered by retailers as a threat. The purpose of this research is to analyze whether showrooming, when compared with online buying behavior in which the customer does not visit the store prior to the purchase, has a positive effect on the price paid online by the customer. The empirical research is based on the database compiled by GfK, which contains detailed information about the shopping journey of 4067 customers who purchased products from different retail sectors. The results, derived from the estimation of several regression models, reveal that showroomers who use their smartphones in store are more likely to purchase products at a higher price, which explains why these customers can be of special interest to retailers.     

Cross-channel free-riding consumer behavior in a multichannel environment: An investigation of shopping motives,sociodemographics and product categories

Cross-channel free-riding, in which consumers use one retailer′s channel to prepare a purchase and then switch to another retailer′s channel to purchase, can substantially erode profit margins. This research aims to understand such free-riding from a consumer empowerment perspective, investigating shopping motives and sociodemographic covariates, as well as how this behavior might differ across product categories. A survey study of decision-making behavior shows that cross-channel free-riders mainly seek to fulfill price comparison, convenience and flexibility needs. The likelihood of free-riding is higher when consumers adopt cross-channel rather than single-channel behavior, which highlights a negative outcome of multichannel retailing. The likelihood of cross-channel free-riding differs across products but not sociodemographic covariates. The findings can be used to develop recommendations for managing retention strategies.     

A multi-category customer base analysis

Customer base analysis is an essential tool to measure and develop relationships with customers. While various models have been proposed in a noncontractual setting, they focus primarily on analyzing transactional patterns associated with a single product category or a firm-level activity, such as the times at which purchases are made at a particular retailer. This research proposes a modeling framework for customer base analysis in a multi-category context. Specifically, we model the time between a customer's purchases at the firm and the product categories that comprise her shopping basket arising from multi-category choice decisions. The proposed model uses a latent space approach that parsimoniously captures the dynamics of multi-category shopping behavior due to the interplay between purchase timing and shopping basket composition. We also account for interdependence among multiple categories, temporal dependence across category choices, and latent customer attrition. Using category-level transaction data, we show that the proposed model offers excellent fit and performance in predicting customer purchase patterns across multiple categories. The forecasts and inferences afforded by our model can assist managers in tailoring marketing efforts across categories.     

Impact of different types of in-store displays on consumer purchase behavior

Research on consumer in-store shopping behavior does not account for the existence of different types of display locations (e.g. storefront, store rear, secondary, front end cap, rear end cap, and shelf displays). This article focuses on accounting for and understanding the impact of various displays on consumer purchase behavior based on the Stimulus-Organism-Response (SOR) theory. Specifically, we study how displays closer to and farther from the main location of the focal category influence consumer purchase behavior. Furthermore, within the different types of displays we investigate the impact of specific types of displays on consumer's category purchase and brand choice and the moderating role of price and discounts. A hierarchical Bayesian model is estimated using scanner panel data for a large U.S. grocery chain that contains unique information on the number of product facings at multiple display locations within a store. We find that displays closer to the focal category have a larger impact, with front end cap displays having the largest impact on category purchase and shelf displays having the largest impact on brand choice. We also demonstrate the synergistic impact of price and discounts in enhancing the impact of displays on consumer purchase behavior and brand choice. Equipped with these findings we propose a display allocation optimization that results in an average increase in revenue of about 11.15% and a strategy to distribute displays across all locations in the store rather than letting one location dominate.     

Examining impacts of negative reviews and purchase goals on consumer purchase decision

Extensive literature has studied the impact of positive online reviews on consumers’ purchase decisions. Research on the role of negative reviews in consumer price perception is heavily under-investigated. This study examines effects of negative reviews on consumer price perception and subsequent purchase behavior while considering the moderating effect of purchase goals. Results from two experiments show that the proportion of negative reviews has stronger negative impacts on purchase decision for consumers with a purchase goal than those without. This research contributes to growing knowledge about negative online reviews and consumer goal literature and offers practical implications for online retailers.     

Buying while expecting to sell: The economic psychology of online resale

Consumer online resale is becoming increasingly common for transactions of secondhand goods. However, when accompanied by a preconceived intention to resell a product after using it, the initial consumer purchasing decision for self-use is complicated by the estimated resale value of that good. We applied the principles of mental accounting to develop and evaluate a new concept that may influence consumer resale and purchase intention: external resale reference price (ERRP). The study examines how online consumer sellers' economic psychology of buying affected their expectation of future online resale outcome. The results indicate that (1) consumers' awareness of future online resale potential can influence their purchasing decisions; (2) ERRP, which is mediated by the estimated resale return, can increase purchase intention; and (3) the effects of ERRP on purchase intention are moderated by online resale likelihood, but are minimal when consumers are aware that resale possibility is extremely low.     

Discovering the variables that influence new home‐buyer service satisfaction

While home builders traditionally think of customer service in terms of upgrades and mortgage options, home buyers are thought to view the quality of service on a much broader basis. Previous research has identified five dimensions of service quality: appearance, reliability, timeliness, knowledge, and empathy. Home‐buyer satisfaction with service quality is then the result of home builders providing services that are perceived as meeting or exceeding buyer expectations. Although much research has been done regarding home‐buyer satisfaction with service quality, there is still a gap between builders' and home buyers' perception of the quality of service. Builders need to identify and understand home‐buyer needs in order to constantly improve service quality. This paper describes an exploratory study that focused on customer satisfaction with service quality. The objective of this study was to assess the correlations between various factors on home‐buyer expectations and their perceptions of service quality. Demographics considered in this study included age, gender and household income, while transaction characteristics included purchase price, number of occupants and house size. Characteristics such as higher income, higher purchase price, and larger house size appeared to value dimensions such as reliability most highly. Characteristics such as lower income, lower purchase price and smaller house size appeared to value dimensions such as empathy and appearance most highly. Gender, age and household size did not have significant associations with expectations or relative importance, but age and household size were associated with actual perceptions of service dimensions. Understanding the influence of these variables on customer satisfaction with service quality can positively impact home builders through improved reputation and increased local referrals.     

Gendering the voiced complaining behavior of customers in small restaurant environments: A case of college students in Zimbabwe

ABSTRACT

Understanding gender-related nuances connected to customer complaining behavior in a valuable market segment in a low-income economy is strategically important to customer relationship management practitioners in the hospitality industry. Using customer complaining behavior taxonomies and Eagly’s social role theory, this quantitative study examines how selected demographic variables, attitude toward complaining, customer loyalty, and likelihood of success affect the verbal complaining behavior of a sample of college students in Zimbabwe in restaurants contexts. The findings revealed that all the proposed predictors had statistically significant effects on voiced complaining. In addition, the gender variable moderated the influence of the non-demographic predictors. Interestingly, the likelihood of success variable had a negative influence on the respondents’ propensity to complain verbally. Based on this evidence, it is concluded that gender is integral to how college students react to service failure in restaurant environments. Consequently, marketers of related services should implement customized gender-sensitive customer complaint handling and service recovery strategies.     

Antecedents to purchase intentions for Hispanic consumers: a ‘local’ perspective

The current study explores consumer attributes such as attitudes, subjective norms, connectedness, and price consciousness and their relationship with purchase intentions of Hispanic shoppers within the locally produced food category. Four hypothesized direct-path relationships and one moderation effect across the four proposed paths were tested via a two-step process in structural equations modeling. Results of measurement model testing suggested that a five-factor model fits well for the Hispanic group. Within the structural model process, a significant positive relationship was found between two proposed paths: consumer attitudes with intention to purchase and price consciousness with intention to purchase. A moderation effect of perceived product availability was found only for the path of price consciousness with intention to purchase. These results suggest that factors such as subject norms and connectedness, often associated with the local food category, may not be important drivers for purchase intentions for the Hispanic food shopper in retail grocery channels. However, other factors relating to attitudes, price consciousness, and product availability may be more salient. From this exploration, implications for marketers are provided and future research directions suggested.     

A Micromodel of New Product Adoption with Heterogeneous and Forward-Looking Consumers: Application to the Digital Camera Category

We develop an empirical model for the adoption process of a new durable product that accounts for consumer heterogeneity as well as consumers forward-looking behavior. Accounting for heterogeneity is important for two reasons. As the mix of consumers with different preferences and price sensitivities could change over time, firms need to update their marketing strategies. Further, it allows for a variety of shapes for the aggregate adoption process over time. As prices for durable and technology products fall over time with firms continually introducing enhanced products, consumers may anticipate these prices and improvements and delay their purchases in the product category. Forward-looking consumers optimize purchase timing by trading off their utilities from buying the product and their expectations on future prices, quality levels, and brand availability. Such forward-looking behavior will result in price dynamics in the marketplace as price changes today influence future purchases. And it results in different shapes of the new product sales pattern over time by influencing the time to take-off. We show how the parameters of our model can be estimated using aggregate data on the sales, prices, and attributes of brands in a product category. We apply our model to market data from the digital camera category. Our data are consistent with the presence of both heterogeneity and forward looking behavior among consumers. At the product category level, we are able to decompose the effects of the entry of Sony into primary demand expansion and switching from other brands. At the brand level, we find that there exist several segments in the market with different preferences for the brands and different price sensitivities leading to differences in adoption timing and brand choice across segments. For a given brand, we show how the changing customer mix over time has implications for that brands pricing strategies. We characterize how price effects vary across brands and over time and how price changes in a given time period influence sales in subsequent periods. Model comparison and validation results are also provided.     

The impact of search costs on consumer behavior: A dynamic approach

Prices for grocery items differ across stores and time because of promotion periods. Consumers therefore have an incentive to search for the lowest prices. However, when a product is purchased infrequently, the effort to check the price every shopping trip might outweigh the benefit of spending less. I propose a structural model for storable goods that takes into account inventory holdings and search. The model is estimated using data on laundry detergent purchases. I find search costs play a large role in explaining purchase behavior, with consumers unaware of the price of detergent on 70 % of their shopping trips. Therefore, from the retailer’s point of view raising awareness of a promotion through advertising and displays is important. I also find a promotion for a particular product increases the consumer’s incentive to search. This change in incentives leads to an increase in category traffic, which from the store manager’s perspective is a desirable side effect of the promotion.     

Strategies to offset dissatisfactory product performance: The role of post-purchase marketing

This research examines the role of post-purchase recovery initiatives in offsetting the negative effect of a dissatisfactory product experience. Experiment 1 explores the effect of counterfactual thinking, a mental simulation process of reflecting upon past events and generating alternative possible outcomes, on product evaluations after an individual experiences a negative purchase outcome. Experiment 2 builds on these findings and shows how customer surveys can be used as tactical tools to boost post-purchase product evaluations. The results indicate that post-purchase marketing efforts, such as customer surveys, can engage consumers in counterfactual thinking and positively affect their product evaluations.