The Dynamics of Online Consumers’ Response to Price Promotion

How does consumers’ price sensitivity at an online retailer change over time? And can we predict their response to price promotion by identifying the latent states of the online consumer–retailer relationship? Our quantification of transits across the consumer–retailer relationship states provides unique insights. For example, price promotion can strengthen consumers’ loyalty only for at least moderately loyal consumers whereas it is not effective at changing nonloyal consumers’ attitudes toward an online retailer (i.e., from nonloyal to loyal). Being opposed to the results from the off-line market, the consumers even in the strong relationship state are likely to seek more coupons as they increase their online shopping experience. The switching behavior observed even after online consumers reach the strong relationship state shows one aspect of the fierce price competition in the online market. Managers in online retailers pay attention to the recent change in a consumer’s buying behaviors rather than the long-term trend of the consumer’s purchase behavior. For instance, the increase of the recent purchase volume strengthens loyalty toward the retailer and/or the habit of buying without a coupon for the consumers in the strong relationship state.

• 저널Information Systems Research · 30(1) · 175–190
• 토픽Digital Marketing and Social Media · Sociology and Political Science
• DOI10.1287/isre.2018.0793
• 저자Young-Soo Kim, Ramayya Krishnan