1. Price as a variable in online
consumer trade-offs
Ted Karlesson and Christer Kuttainen, Leyland Pitt, Stavroula Spyropoulou
Presenter: Jessie Liu
Instructor: Dr. Pi-Ying Hsu
Date: October 8, 2012

2. Citation
Karlsson, T., Kuttainen, C., Pitt, L., &
Spyropoulou, S. (2005). Price as a
variable in online consumer trade-offs.
Marketing Intelligence & Planning, 23(4),
350-358.
2

3. Content
Introduction
Literature Review
Methodology
Result & Conclusion
Reflection
3

4. Introduction
Motivation
Purpose of the Study
4

5. Introduction
Local Store: Online Vendor:
Immediate Delivery time
availability
Guarantee
Local demand availability
wer Price
Lo
5

6. Introductio
Cost
Time n
Dista
! nce
!
!
6

7. Motivation
Service
Availability
Assortment
Price
Delivery costs
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8. Purpose of the study
- To identify the extent to which lower
prices can motivate online purchasing,
and the effect of other offering
attributes on the trade-offs that
customers make
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9. 9

10. Literature Review
Very little is
known about
the trade-offs
consumers are
willing to make
when making
(Odekerken-Schroder
online purchase. & Wetzels ,2003)
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11. Literature Review
Wheel of When a new form of
Retailing theory retailing, enters the
market, it begins by
offering lower prices
and accepting lower
margins by offering
fewer services.
(McNair, 1958)
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12. Literature Review
The effect of communications technology on
markets is to make them more efficient. So if
the Internet as a communication technology
makes markets more efficient, the one might
expect prices to arise where customers'
translation cost are lowered.
(Downes & Mui,1998)
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13. Literature Review
While the dollar price reflects the direct
monetary outlay by the buyer, the extended
price refers to the time cost of the consumer
incurred by searching and waiting, as well as
risk associated with the purchase.
(Talaga & Tucci, 2001)
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14. How important a motivator is price in
online purchasing environments to
customers where other factors are also
considered in the decision making?
Does the relative importance of price
differ between online and physical
channels for a particular product bundle?
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15. Methodology
Participant ． Procedures
Data Analysis
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16. Participant
Respondents consisted of
undergraduate business and
engineering students at a large
Swedish university.

18. Likert Scale
Totally Undeci Totally
Question agree
Agree
ded
Disagree
disagree
1. My mom will be a
good rapper.

19. Price
Buyback
Accessibility
Conjoint policy
Analysis
In-stock Ease of
status returns
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20. Attribute levels - Attribute levels -
Attributes
Online Offline
Price 500 SEK 500 SEK
550 SEK 550 SEK
600 SEK 600 SEK
Buyback policy Will not buy back Will not buy back
Will buy back, but no price Will buy back, but no price
guarantee guarantee
Guaranteed 250 SEK Guaranteed 250 SEK
Returns policy Cash refund Cash refund
Store / Site credit Store / Site credit
Delivery time Cash refund Cash refund
Store / Site credit Store / Site credit
Place for delivery Home
(online only)
Distance to bookstore 500 m
(offline only) 10 km

21. Data analysis
SPSS
Discrete
regression model
Pearson’s R Kendall’s T

22. Result &
Conclusion

23. Mean importance Part-worth
Attribute Level
per cent utility
Price (SEK) 35.47 500 1.3662
550 0.0101
600 -1.3763
Returns policy 9.36 Money back for unused book -0.3617
Unused book can be exchanged -0.3617
for another book
Delivery time 29.59 Two days 1.0833
Six days 0.1212
Ten days -1.2045
Place for delivery 8.28 Home 0.3201
Postal office -0.3201
Buyback policy 17.30 Will not buy back -0.6793
Will buy back, but no price 0.0215
guarantee
Guaranteed 250 SEK buy back 0.6578
price
5.5177 Constant

24. 35%
27%
19%
9%
8%

25. Mean importance Part-worth
Attribute Level
per cent utility
Price (SEK) 22.25 500 0.6738
550 0.2845
600 -0.9583
Returns policy 6.77 Money back for unused book 0.2482
Unused book can be exchanged -0.2482
for another book
Delivery time 25.37 In stock 1.0071
In stock in six days -0.1536
In stock in ten days -0.8536
Distance to 26.73 500 m 0.9804
bookstore 10 km -0.9804
Buyback policy 18.89 Will not buy back -0.6262
Will buy back, but no price -0.1333
guarantee
Guaranteed 250 SEK buy back 0.7595
price
4.8702 Constant

26. 27%
25%
22%
19%
7%

27. Online shoppers are “bargain-seekers”.
Respondents are willing to make an
effort to purchase online in order to
obtain price savings.
Customers expect prices to be lower in
an online environment that in a
traditional sales channel.
Conclusion

29. To assume that online stores would
always be “in-stock”, this is clearly not
the case in reality.
The customers’ satisfaction has a direct
and positive effect on customer
intention to return.
Originality- it is also an important
factor to effect on trade-offs that
customers make.

30. Thank you for
your
listening!
30