Bid-Elicitation Interfaces and Bidding Behavior in Retail Interactive Pricing

Advances in information technology have led to a substantial increase in the use of interactive pricing mechanisms, where buyers (i.e., consumers) and sellers (i.e., retailers) enter a formal computer-mediated price-negotiation process during which consumers submit bids for a specific product. This article examines how the interface used for bid elicitation affects bidding behavior and, ultimately, retailer profit. Our focus is on one key aspect of the bid-elicitation interface – how retailers require bidders to articulate their bids. Evidence from four experiments involving economically consequential bids demonstrates that the candidate bid amounts specified by the retailer have a strong influence on bidding behavior, and consequently also on retailer profit. In particular, the level of candidate bid amounts has a positive effect on actual bid amounts, whereas it has a negative impact on the likelihood that a consumer will actually submit a bid. Critically, we show that the former effect can more than offset the latter to cause an increase in retailer profit. We propose and find support for two distinct pathways driving this phenomenon – the candidate bid amounts (1) influence bidders’ valuations of the offered product and (2) shape bidders’ beliefs about what bid amounts will be successful. Our results highlight the importance of the design of user interfaces for interactive pricing, demonstrating that even seemingly innocuous aspects of interfaces can have a dramatic impact on bidding behavior and retailer profit.     

An Empirical Analysis of Bidding Fees in Name-your-own-price Auctions

Interactive pricing mechanisms integrate customers into the price-setting process by letting them submit bids. Name-your-own-price auctions are such an interactive pricing mechanism, where buyers' bids denote the final price of a product or service in case they surpass a secret threshold price set by the seller. If buyers are given the flexibility to bid repeatedly, they might try to incrementally bid up to the threshold. In this case, charging fees for the option to place additional bids could generate extra revenue and reduce incremental bidding behavior. Based on an economic model of consumer bidding behavior in name-your-own-price auctions and two empirical studies, we analytically and empirically investigate the effects bidding fees have on buyers' bidding behavior. Moreover, we analyze the impact of bidding fees on seller revenue and profit based on our empirical results.     

(Un)expected Bidder Behavior in Spectrum Auctions: About Inconsistent Bidding and Its Impact on Efficiency in the Combinatorial Clock Auction

The combinatorial clock auction is a two-stage auction format, which has been used to sell spectrum licenses worldwide in the recent years. It draws on a number of elegant ideas inspired by economic theory. A revealed preference activity rule should provide incentives to bid straightforward, i.e., consistent with the bidders’ valuations on a payoff-maximizing package, in each round of the clock phase. A second-price rule should set incentives to bid truthfully in both phases. If bidders respond to these incentives and bid straightforward in the clock phase and truthful in the second sealed-bid stage, then the auction is fully efficient. Unfortunately, bidders might neither bid straightforward in the clock phase nor truthful on all packages in the second sealed-bid stage due to strategic reasons or practical limitations. We introduce metrics based on Afriat’s Efficiency Index to analyze straightforward bidding and report on empirical data from the lab and from the field in the British 4G auction in 2013 and the Canadian 700 MHz auction in 2014, where the bids were made public. The data provides evidence that bidders deviate significantly from straightforward bidding in the clock phase, which can restrict the bids they can submit in the supplementary phase. We show that such restrictions can have a significant negative impact on efficiency and revenue.     

A Transaction Utility Approach for Bidding in Second-Price Auctions

In both the Vickrey and eBay auctions, bidding the reservation price is the optimal strategy within the conventional utility framework. However, in practice, buyers tend to bid less than their reservation prices, and bid multiple times, thus increase their bids, in the course of an auction. In this paper, we show that both underbidding and multiple bidding behaviors can be consistent with utility maximization, if buyer's utility incorporates a transaction utility (reference price dependent) component. Transaction utility is based on the difference between the buyer's reference price and actual price paid; it captures the perceived value of the deal. More specifically, we show that the optimal bid is lower than the reservation price, but higher than the reference price. Furthermore, buyer may re-bid (above the prior optimal level) if the reference price is revised upon observing a higher current price.     

Relationship marketing in A B2C context: The moderating role of personality traits

More and more, retailers are investing in relationship building as a strategy for enhancing customer retention in the business-to-customer (B2C) context. However, some marketing scholars have expressed concern over the usefulness of relationship marketing under certain conditions. As such, this study investigates the moderating role of personality traits on the relationship between satisfaction-driven relationship quality and behavioral loyalty. Based on a sample of 158 retail shoppers, we find that customers’ overall satisfaction with the retailer leads to quality customer–firm relationships and ultimately, behavioral loyalty to the retailer. We also found that the impact of relationship quality on behavioral loyalty depends on the consumer's personality traits, i.e., consumer innovativeness, variety seeking, and relationship proneness. These findings extend the extant relationship literature by showing that the value of relationship marketing is not universal, thereby refining our understanding of the relationship between customer behavior and relationship marketing. Implications for academics and managers are discussed.     

Consequences of Riding Takeover Waves: Australian Evidence

This paper uses Australian data to analyze takeover bid premiums and long‐term abnormal returns for mergers that occur during wave and non‐wave periods. Findings reveal that bid premiums are slightly lower in wave periods, and bidding firms earn normal post‐takeover returns (relative to a portfolio of firms matched on size and survival) if their bids were made in non‐wave periods. However, bidders who announced their takeover bids during wave periods exhibit significant underperformance. For mergers that took place within waves, there is no difference in bid premiums nor is there a difference in the long‐run returns of bidders involved during the first half and second half of the waves. We find that none of prominent theories of merger waves (managerial, misvaluation, and neoclassical) can fully account for Australian takeover waves and their effects. Instead, our results suggest that Banal‐Estanol et al.'s screening theory of merger activity, by combining the misvaluation and neoclassical theories, may provide a better explanation.     

Customer choices of manufacturer versus retailer brands in alternative price and usage contexts

This article offers a context-dependent theory of how price changes influence consumer purchase choice for fast moving consumer goods (FMCGs) for manufacturer (large household share) and retailer (small household share) brands. The theory proposes that the influence of price on demand is systematically very sensitive to context effects; more specifically, the theory includes the hypothesis that elasticity is much greater when the price change results in the manufacturer and retailer brands having the same price compared to when the price change keeps the manufacturer brand price above the retailer brand price. The implicit and/or explicit association with higher quality with the manufacturer versus retailer brand may be the main reason for buying the higher priced manufacturer brand. Decreasing the price of the manufacturer brand to equal the retailer brand's price takes away the primary reason for buying the retailer brand (i.e., saving money); increasing the price of the retailer brand to equal the manufacturer brand's price has the same effect. The empirical findings in the studies that this article reports support the hypothesis and confirm Scriven and Ehrenberg's [2004. Consistent consumer responses to price changes. Australas. Mark. J. 12(3), 21–39] major conclusion that relative order of price is more important than relative distance.     

The Determinants of Outcome in UK Take–over Bids

In this paper we have investigated the determinants of the outcome of 238 friendly and hostile take–over bids that occurred in the UK during the 1980s. We also use our model for prediction purposes and in order to map the effects of a variety of independent variables on the probability of the bid being successful. Our main results can be summarised as follows. First, target management resistance and the wealth effect of a bid are key determinants of the outcome of a bid. Second, we find limited evidence to suggest that share ownership by the bidding company and by target directors also contributes significantly to bid outcome. In the latter case we find a non–linear relationship consistent with the argument that when director holdings are low the bid is discouraged but when they are high the bid is encouraged. Third, our model is good at predicting outcome for all bids but weak at predicting the outcome of hostile bids on their own.     

Strategic Bidding for Multiple Units in Simultaneous and Sequential Auctions

A buyer in an electronic marketplace may be interested in buying a bundle of items, where any one item in the bundle may not be of particular interest. The emergence of online auctions allow such users to obtain bundles by bidding on different simultaneous or sequentially run auctions. Because the number of auctions and the number of combinations to form the bundles may be large, the bundle bidding problem becomes intractable and the user is likely to make sub-optimal decision given time constraints and information overload. We believe that an automated agent that takes user preferences and budgetary constraints and can strategically bid on behalf of a user can significantly enhance user profit and satisfaction. Our first step to developing such an agent is to consider bundles containing many units of a single item to be bought from auctions that sell only multiple units of one item type. We assume that users obtain goods over several days. Expectations of auctions and their outcome in the future allow the agent to bid strategically on currently open auctions. We present an expected utility based strategy to decide how many items to bid for in the current auctions, and the maximum price to bid for each item. We evaluate our proposed strategy in different configurations by varying the number of items sold per auction, number of concurrently running auctions, expected closing prices, etc. We simulate several multiple unit English auctions per day, over multiple days, where most of the bidders bid their true utilities drawn from a distribution. The strategic bidding agent has knowledge of this distribution and uses it to determine its bids. A strategic agent who looks farther ahead into the future produces larger returns when there are few strategic bidders. We also evaluate the effect of risk attitudes on the relative performance of the bidders.     

Small-independent retailers vs. organized retailers: An empirical study in Indonesian economics of service industries

This paper explores the influence of strategic planning and functional-business strategy in helping small-independent retailers/traditional retailers to survive amidst the competition with organized retailers. Based on cross-sectional survey research, this study illustrates the influence of strategic planning and functional-business strategy to retailer–supplier relationship, consumer loyalty program, and retailer performance. In order to clarify the relationships among these constructs, a structural equation model (SEM) is employed to examine the model fit and the five hypotheses. The results show that strategic planning is critical for small independent retailers due to its influence on the retailer–supplier relationship and consumer loyalty program. Besides, consumer loyalty program is also influenced by functional-business strategy. The retailer–supplier relationship and consumer loyalty program exhibits a positive influence on the small-independent retailer performance. The research supports the existence of a more complex that the consumer loyalty program fully mediates the relationships between strategic planning and functional-business strategy on retail performance. Moreover, the retailer–supplier relationship fully mediates the relationship between strategic planning and small retailer performance. These findings constitute a new contribution to the literature on small retailer research streams through the development of cross category relationships such as strategy, buyer behavior, and structure categories. Besides, this study can enhance the strategic management as well as the performance of small-independent retailers to achieve sustainable competitive advantage.     

模糊综合评价法在最低标中标评标中的应用

在工程招投标中,越来越倾向于采用最低标中标法确定中标者。通过对我国工程招投标现状的描述,找出了国内工程招投标活动中的积极方面和存在的问题,建立了采用模糊综合评价思想确定最低标中标者的数学模型、分析步骤及应用范围。提出了确保最低标中标法得以全面实施建议和保证措施。最低标中标符合市场经济规律。     

Thanks COVID-19, I'll reconsider my purchase: Can fear appeal reduce online shopping cart abandonment?

Despite the widespread prevalence of online shopping cart abandonment (OSCA) and allusions to this behavior in popular press, scholars have yet to examine the key determinants of OSCA. This study used the stimulus-organism-response (S–O-R) model to explore the factors influencing consumers' OSCA and decision to buy from a land-based retailer. Two studies were carried out to test the proposed hypotheses among Mainland China's Generation Y consumers. Data was collected based on two product categories (i.e., apparel and electrical appliances) at two different time scenarios (i.e., pre- and post-pandemic). The findings reveal that hesitation at checkout increases OSCA, while consumers' decision to buy from a land-based retailer is influenced by their emotional ambivalence and OSCA. Furthermore, fear appeals appear to weaken the relationship between OSCA and the decision to buy from a land-based retailer. This study has implications for researchers and practitioners who seek to effectively reduce the rate of OSCA.     

Consumer responses to characteristics of price-matching guarantees: The moderating role of price consciousness

The present study develops and tests a conceptual model of consumer response to different types of price-matching characteristics (i.e., refund depth, length, and scope) across consumer segments with varying levels of price consciousness. A computer shopping simulation results show that a deep refund is interpreted as a signal of low prices by nonprice conscious consumers. However, price conscious consumers are found to associate deep refunds with increased prices, an unintended outcome for the retailer. The effects of price-matching characteristics on search and purchase behavior were also found to vary across more and less price conscious consumer segments.     

The effect of experience on Internet auction bidding dynamics

On the basis of the bidding history of a panel of new eBay bidders, we examine the impact of different types of experiences on bidding behavior evolution. Accounting for unobserved bidder heterogeneity, the results indicate that losing experiences make the bidders’ bidding behavior evolve toward the normative predictions of auction theory, in that they submit fewer bids and bid later. Winning experiences, however, do not have such an effect. Moreover, the experience effect pertains to the bidder’s entire previous bidding experience regardless of product categories. We also assess the potential bias introduced by using feedback ratings (compared with actual participation) as experience measures.

Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

水利水电工程投标报价的策略和技巧探讨

本文以某估价M=1200万元的工程投标为实例,计算并分析出四个不同报价的得标概率,从而算出预期利润、三个对手的投标取胜的概率以及不同概率后的预期利润,进行合理的报价投标,通过对实际情况的结合,研究并探讨具体投标的技巧.     

Retailer voluntary investment against a threat of manufacturer encroachment

To elucidate supply chain cooperation between a manufacturer and a retailer, this study examines a model in which the retailer makes voluntary investments to reduce the marginal production cost of the manufacturer. The manufacturer is allowed to introduce a direct selling channel in addition to the indirect channel through the retailer (i.e., manufacturer encroachment), which however dampens the retailers’ investment incentives. The retailer can leverage its voluntary investments as a means of deterring manufacturer encroachment. We demonstrate that manufacturer encroachment is strategically deterred when the retailer’s cost-reduction technology is sufficiently effective. This strategic encroachment deterrence encourages the retailer to invest more, but it narrows the variety of channels from which consumers can select. When the latter effect dominates the former effect, consumer surplus declines with strategic encroachment deterrence.

     

Retailer Categorization: How Store-Format Price Image Influences Expected Prices and Consumer Choices

Prior research indicates that consumers may base their retail decisions (e.g., store choice, purchase quantity) on price image, which has been defined as consumer perceptions “of the aggregate price level of a retailer” (Hamilton and Chernev 2013, p. 2). The present research shows that consumers associate different price images not only with specific retailers, but more broadly with various store formats — such as grocery stores, convenience stores, and specialty stores. Six studies provide evidence that store-format price image exerts influence on consumer price expectations and store choice decisions, and that these retailer categorization effects are distinct from the effects of retailer price image.     

An Analysis of Design Problems in Combinatorial Procurement Auctions

Traditional auction mechanisms support price negotiations on a single item. The Internet allows for the exchange of much more complex offers in real-time. This is one of the reasons for much research on multidimensional auction mechanisms allowing negotiations on multiple items, multiple units, or multiple attributes of an item, as they can be regularly found in procurement. Combinatorial auctions, for example, enable suppliers to submit bids on bundles of items. A number of laboratory experiments has shown high allocative efficiency in markets with economies of scope. For suppliers it is easier to express cost savings due to bundling (e. g., decreased transportation or production costs). This can lead to significant savings in total cost of the procurement manager. Procurement negotiations exhibit a number of particularities:

Store Brand Quality and Retailer’s Product Line Design

This study analyzes a retailer’s store brand quality decision in vertically differentiated product categories. We analyze a game theoretic model composed of one or two national brand manufacturers and a retailer, who strategically chooses the quality level(s) of its store brand(s) relative to the well-established national brand position(s) to maximize its category profit. Our analysis reveals that the nature of a retailer’s store brand quality positioning is quite different from the manufacturer’s national brand positioning decision, and that the best position for a store brand is not “as close to a national brand as possible” as previous studies suggest. Instead, the optimal quality position of each store brand is remarkably sensitive to the distribution of consumers’ willingness-to-pay. In particular, the relative proportions of quality sensitive consumers and price sensitive consumers determine the balance of three key strategic forces — the market expansion force, the retail margin force, and the consumer profitability force, leading to different optimal product line designs for store brands across different category environments. Interestingly, against multiple incumbent national brands, the retailer’s optimal product line design includes a store brand positioned at the highest quality level in the category only if most consumers are moderately quality conscious. We also analyze the implications of national brands’ brand equity for retailers’ store brand strategy.