Seiler, Stephan (2013) The impact of search costs on consumer behavior: a dynamic approach. Quantitative Marketing and Economics, 11 (2). pp. 155-203. ISSN 1570-7156
Full text not available from this repository.Abstract
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.
| Item Type: | Article |
|---|---|
| Official URL: | http://link.springer.com/journal/11129 |
| Additional Information: | © 2012 Springer Science+Business Media, LLC |
| Divisions: | Centre for Economic Performance |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce |
| JEL classification: | D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis |
| Date Deposited: | 13 Sep 2013 08:16 |
| Last Modified: | 12 Dec 2024 00:26 |
| URI: | http://eprints.lse.ac.uk/id/eprint/52553 |
Actions (login required)
 |
View Item |
