An Empirical Analysis of the Extreme Cherry Picking Behavior of Consumers in the Frequently Purchased Goods Market

Extreme cherry pickers are customers who seek price deals and excessively avail themselves of deep discount offers, which generates negative profits for retailers. This study uses market transaction and primary consumer survey data to provide insights into the determinants, prevalence, and profit impacts of such behavior in the frequently purchased goods market. We find that the extreme cherry picking segment is small (about 2% of all shoppers), but its relative value varies across stores, and consumers manifest this behavior only in secondary stores. An inverse U-shaped relationship marks consumers’ opportunity costs for cross-store price search and likelihood of extreme cherry picking behavior. Finally, we also find that a loss leader promotional strategy adds to retailers’ bottom lines, despite the pure loss generated by extreme cherry pickers.     

Online Price Search: Impact of Price Comparison Sites on Offline Price Evaluations

Consumers increasingly rely on Internet price comparison sites (PCS) to gain knowledge about the market. The prices generated by a PCS search can act as contextual reference prices and influence the attractiveness of prices encountered later as consumers shop offline at local stores. This paper demonstrates that both PCS retailer ratings and the shape of the PCS price distribution influence the impact of PCS search results on later price evaluations. A favorable PCS retailer rating increases the perceived validity of the price associated with that retailer, enhancing the impact of that PCS price on offline price evaluations (Study 1). The shape of the PCS price distribution can also influence later price evaluations, however this effect depends on the information provided by the PCS retailer ratings. When PCS retailer ratings are similar, implying similar validity for the associated prices, low PCS prices and those appearing more frequently in the PCS price distribution have more impact (Studies 2 and 3). When PCS retailer ratings are variable (some high and some low), the PCS price distribution effect occurs only when the PCS retailer ratings provide congruent information about price validity — that is, the most frequent price is offered by retailers with more favorable ratings. Study 3 shows that price validity inferences do mediate this result. Finally, we depart from the offline shopping context to show that when consumers choose a retailer directly from the PCS search results, the effect of PCS retailer ratings is stronger for high-priced retailers and for consumers who rely less on the retailer price as a heuristic to infer retailer service level. Based on our findings we offer insights for online and offline retailers when considering strategic responses, such as price matching guarantees.     

Shopping Benefits of Multichannel Assortment Integration and the Moderating Role of Retailer Type

To what extent should multichannel retailers integrate assortments across channels? Previous literature controversially discusses the question of which integration strategy is most successful but arguments are only conceptual, and no empirical assessment exists. This article presents a framework that (a) shows how customers’ perceived shopping benefits of variety, convenience, and reduced risk mediate the impact of multichannel assortment integration (full, asymmetrical, no) on patronage intentions and (b) differentiates the impact for retailer types based on substitutive, complementary, and independent assortment relations. Two large-scale experimental studies empirically investigate whether a dominant integration strategy exists in the context of full and simultaneous information (Study 1) and more uncertain and subsequent information accessibility (Study 2). We consistently find that full integration dominates no integration across assortment relations, but asymmetrical integration—the strategy that is most often realized by multichannel retailers—can have a detrimental impact for substitutive relations compared with no integration. Asymmetrical integration can be more beneficial than full integration for independent relations, while customer outcomes differ less for complementary relations. Researchers and managers can use our findings to understand how shopping benefits of variety, convenience, and reduced risk explain the different customer outcomes of multichannel assortment integration, depending on retailer type.     

Private labels and public quality standards: How can consumer trust be restored after the mad cow crisis?

In those sectors faced with questions of food safety (meat, fruit, vegetables), new private labels have been set up in Europe in order to restore consumer trust. In this paper, we perform a theoretical analysis of these private labels. We propose an original model of vertical relationships between producers and retailers which takes into account two supply sources through (i) a competitive spot market on which the retailers buy a minimum quality standard product and (ii) supply contracts aimed at marketing higher quality private labels. We study how producers and retailers could cooperate in setting up these new labels. From a public point of view, we show the complementarity of a moderate increase in public quality standards and the creation of these new private labels. JEL Classification L22. L23. Q13. Q18     

Improving the Effect of Guarantees: The Role of a Retailer's Reputation

This research examines the interaction of two cues, retailer reputation and guarantees on evaluations. Extending Mandler's (1982) incongruity framework, we illustrate across three studies how moderately incongruent signals can be combined to enhance evaluations. Unique to our application of moderate incongruity, however, is the fact that guarantee cues can be incongruent with the retailer's reputation, in terms of domain (e.g., price matching guarantee (PMG) offered by provider whose reputation is based on service, not pricing) or valence (e.g., PMG offered by retailer known for carrying expensive merchandize). This dual perspective on the source of incongruity (domain or valence) is important and highlights when guarantees enhance evaluations.     

The different faces of coupon elasticity

Coupons account for over two-thirds of all consumer promotional efforts initiated by the manufacturers of consumer goods. In this study, the impact of coupons on brand sales is investigated and how that impact decays over the life of the coupon is demonstrated. Specifically, we present an econometric model that can capture coupon effects in terms of equivalent price reduction, account for coupon effects over time, allow inference of coupon effects when retailers decide to double or triple the coupon value, and provide both self-coupon and cross-coupon elasticities at different levels of aggregation. A widely used sales response model is adapted, and an analytical model is proposed to estimate both the self-coupon and cross-coupon (face value) elasticities of sales at the store level. From the store-level elasticity estimates for a given week, the authors analytically derive the coupon elasticities for the chain level by aggregating across stores, and over the life of the coupon by aggregating over time. The proposed sales response model is estimated with the data obtained from three markets for various product categories, and the coupon elasticities are computed. The proposed framework allows one to demonstrate the hypothetical equivalence of a shelf-price reduction for a given coupon face value in each week. Also, the effect of doubling the face value of a coupon results in more than a proportionate increase in elasticity. The authors find that both self and cross-coupon elasticities are much smaller in magnitude than the average self and cross-price elasticity measures reported in the literature.     

To Justify or Not to Justify: The Role of Anticipated Regret on Consumers’ Decisions to Upgrade Technological Innovations

Prior research suggests that adoption decisions are primarily based on product features and experiential opportunities, like trial and observation. Our research follows inquiries that identify anticipated regret (AR) as an emotion integral to consumer decision making. Prior research and current retailing practice assume that AR can be alleviated by compelling product attribute-based rationales for immediate purchase. These rationales often take the form of direct attribute comparisons between the current best and the future technologies. Counter-intuitively, we find that giving consumers attribute-based justifications for immediate purchase produces a uniform level of AR and purchase delay regardless of the perceived rate of innovation (PRI). However, under conditions of low PRI and no justification, AR decreases significantly. A clear implication of our findings is that firms marketing current technology should not rush to provide consumers with justifications for immediate upgrade since such communications will remind consumers of what they might miss if they adopt now, resulting in increased AR and purchase delays. Instead, we suggest that retailers focus promotional efforts on highlighting the hedonic benefits consumers experience by adopting today.     

The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study

Summary This paper analyzes empirically the relationship between pay and performance. Economic and psychological theories predict that the design and implementation of a performance measurement and compensation system affect the motivation of employees. Our survey results demonstrate a positive relationship between the perceived characteristics of the complete compensation system and extrinsic motivation. Intrinsic motivation is not affected by the design of monetary compensation, but by promotion opportunities. The compensation system also significantly affects work satisfaction and turnover intent. Our results have both managerial as well as policy implications. We would like to thank the organization and the participants of the 2002 conference of the Performance Measurement Association in Boston for helpful discussions and also seminar participants of the Dutch Labor Market Conference. We are grateful for the comments provided by Bruno S. Frey. The paper has also significantly benefited from the suggestions and comments of two anonymous referees.     

Antecedents of retailer loyalty: Simultaneously investigating channel push and consumer pull effects

This study includes information technology (IT) related industries as the focus and aims to examine the antecedents of retailer loyalty toward brand owners by simultaneously investigating push and pull effects in the channel system. The study interviews 274 independent retailers who sell IT related products to end consumers. The results show that the retailer perceived value of selling the brand owner's products plays a pivotal role in promoting their loyalty toward the brand owners. Retailer loyalty toward brand owners comes directly from brand owners' push efforts, and indirectly from pull effects. Additionally, the specific asset invested by each party (brand owners, retailers, and customers) strengthens the relationship within each other in the channel system.     

Brand morphing across Wal-Mart customer segments

The premise of segmentation theory is that different segments each have a discrete customer profile and behavioral characteristics. At a conceptual level, the recent branding literature recognizes that different sub-cultures or segments could experience different meanings of an organization's brand. However, few quantitative studies address the issue. The current paper combines branding and segmentation theory and offers a new perspective on whether all segments have the same brand meaning. A leading discount retailer, Wal-Mart, is the focus of this Canadian-based investigation. Two segments of Wal-Mart customers are the basis of the study — one segment preferring Wal-Mart and one less attached. The research quantifies the two networks of brand meaning that the two segments associate with the Wal-Mart (corporate) brand. Empirically, brand morphing of the corporate brand occurs, with different brand meanings across the two segments.