Amit Bhatnagar

On risk, convenience, and Internet shopping behavior

The past century experienced a proliferation of retail formats in the marketplace. However, as a new century begins, these retail formats are being threatened by the emergence of a new kind of store, the online or Internet store. From being almost a novelty in 1995, online retailing sales were expected to reach

A latent class segmentation analysis of e-shoppers

7 billion by 2000 [9]. In this increasngly timeconstrained world, Internet stores allow consumers to shop from the convenience of remote locations. Yet most of these Internet stores are losing money [6]. Why is such counterintuitive phenomena prevailing? The explanation may lie in the risks associated with Internet shopping. These risks may arise because consumers are concerned about the security of transmitting credit card information over the Internet. Consumers may also be apprehensive about buying something without touching or feeling it and being unable to return it if it fails to meet their approval. Having said this, however, we must point out that consumers are buying goods on the Internet. This is reflected in the fact that total sales on the Internet are on the increase [8, 11]. Who are the consumers that are patronizing the Internet? Evidently, for them the perception of the risk associated with shopping on the Internet is low or is overshadowed by its relative convenience. This article attempts to determine why certain consumers are drawn to the Internet and why others are not. Since the pioneering research done by Becker [3], it has been accepted that the consumer maximizes his utility subject to not only income constraints but also time constraints. A consumer seeks out his best decision given that he has a limited budget of time and money. While purchasing a product from a store, a consumer has to expend both money and time. Therefore, the consumer patronizes the retail store where his total costs or the money and time spent in the entire process are the least. Since the util-

Role of word of mouth in online store loyalty

Abstract We apply a latent class modeling approach to segment web shoppers, based on their purchase behavior across several product categories. We then profile the segments along the twin dimensions of demographics and benefits sought. We show that benefits sought can provide more diagnostic information than mere descriptive demographic profiling. Our study has some interesting findings that shed light on consumer perceptions and behavior with respect to online commerce. First, consumers are more concerned about web attributes that are associated with perceived losses than with web attributes that consumers associate with gains. Second, compared to other online purchase-related attributes, getting the lowest price does not appear to be a very important attribute for web shoppers. This finding may also indicate that prices on web pages are somewhat similar, and consumers are moving on to other criteria to continue their evaluation process. Third, demographics do not discriminate between web buyers even though that has been the traditional focus with the Internet. Fourth, there is a large segment of web surfers who dislike buying on the Web; the predominant reason for this appears to be their perception about the security of sensitive information. This segment feels that not only is it the most important of all attributes for online commerce, but also that the Web does a very poor job on this attribute/benefit.

Identifying Locations for Targeted Advertising on the Internet

Comparing online store ratings with other e-store loyalty factors.

Choosing the Right Mix of On-line Affiliates: How Do You Select the Best?

Due to steady erosion in the effectiveness of on-line advertising (e.g., banners and buttons placed at frequently visited sites), on-line businesses need to target their ad campaigns more precisely to reach the segments they are interested in. This paper examines the issue of how to identify ideal paid advertising, banner exchange, or affiliate partner locations, and proposes a model based on consumer search behavior. Calibrated with data obtained from searches for information in 18 different categories, the model allows for heterogeneity by permitting consumers to belong to different segments that have idiosyncratic search points and thresholds. It also includes a segment-membership function, specified in terms of consumer demographics, that can be used to identify the demographics associated with different focal groups.Due to steady erosion in the effectiveness of on-line advertising (e.g., banners and buttons placed at frequently visited sites), on-line businesses need to target their ad campaigns more precisely to reach the segments they are interested in. This paper examines the issue of how to identify ideal paid advertising, banner exchange, or affiliate partner locations, and proposes a model based on consumer search behavior. Calibrated with data obtained from searches for information in 18 different categories, the model allows for heterogeneity by permitting consumers to belong to different segments that have idiosyncratic search points and thresholds. It also includes a segment-membership function, specified in terms of consumer demographics, that can be used to identify the demographics associated with different focal groups.

Product Choice Strategy for Online Retailers

Abstract In affiliate advertising, an on-line retailer places a link for its business at a host businesss site. The host earns a commission whenever a visitor clicks the link and consummates a transaction with the sponsor. We offer a framework that on-line retailers can use to find appropriate affiliates. Our approach is based on two assumptions. First, we assume that hosts that carry products related to those of the sponsor will be good affiliates. Second, we assume that the relationships between products are reflected in how consumers search for information. Our model uncovers relationships between products on the basis of these two assumptions and thereby identifies potential affiliates.

Cooperative advertising in a dual channel supply chain

An important strategic issue for managers planning to set up online stores is the choice of product categories to retail. While the “right†product category would depend on a number of factors, here we focus on the following two factors: compatibility of the product with the online channel, and the competition between the traditional brick and mortar channel and the online channel. This is to acknowledge two well-known facts: Certain products are more suitable for selling through the Web than through other channels; and an online retailer competes with not only other online retailers, but also traditional brick and mortar retailers. To determine the right product category, we develop a game theoretical model that allows for competition between the retailers. We study both Stackelberg and Bertrand competition models, as these two models capture the essence of different types of competition on the Web. Based on our results, we propose that, under all types of competition, the optimal product is one that is only moderately compatible with the Internet.

Shopping Style Segmentation of Consumers

The focus of this study is cooperative (co-op) advertising and the impact it has on the dual channel supply chain. We obtain equilibrium pricing and co-op advertising policies under two different competitive scenarios: Bertrand and Stackelberg equilibrium. We also compare the profit gains under these two marketing games. Based on our results, we propose the optimal strategies that system members should adopt in a dual channel competition. We also illustrate that by strategically implementing a cooperative advertising strategy under different market structures, both the system players can effectively improve their overall profits in a dual channel supply chain management.

Modeling the role of retail price formats, and retailer competition types on production schedule strategy

The World Wide Web has rapidly become an alternative means to reach customers and has attracted the attention of many businesses. Unfortunately, however, despite its growth, there is little knowledge of which consumers would be willing to switch to the new format and to what extent. Our paper is aimed at providing some insights into these questions. Specifically, we propose a model to identify segments that differ in their shopping style, i.e., in their preference for which format, or bundle of formats, they like to shop in.Our research question, and model, is similar in spirit to prior research in marketing on how consumers choose assortments. Despite this similarity, our research makes some substantive and methodological contributions to the literature. Substantively, we examine the issue of the choice of channel assortments by consumers across a variety of product categories. We believe this is an important question and one that has not been examined earlier. From a methodological point of view, our model adds to earlier work by specifying the utility of an assortment as a sum of the deterministic and stochastic components of the utilities of its members. This contrasts with previous research where only the deterministic components of the utilities of the component brands of an assortment are added and the relationships between their random components are not accounted for.We calibrate the model on data regarding the format choices of households. In order to control for potentially similar format preferences across purchases of different categories we specify the model to allow for correlation between format preferences over the choice history of each household. Our results suggest that there are four segments of consumers that differ in their preference for different types of formats.

Do determinants of online shopping differ for personal shoppers and professional shoppers

Abstract To study the determinants of choice between make-to-order (MTO) and make-to-stock (MTS), production scientists have traditionally focused on production-specific factors. However, the choice can be also influenced by marketing-specific factors such as the pricing strategy of retailers. This paper, therefore, develops a modeling framework to link the determination of the optimal production strategy of MTS–MTO to the retailing strategy of EDLP-HiLo. We characterize an optimal production strategy as one that maximizes total system wide profits in a centralized system. We show that the optimum production strategy would depend on whether the manufacturer is delivering to an every day low pricing (EDLP) store or to a high low pricing store (Hi–Lo). Additionally, the production plan is demonstrated to be a function of the nature and type of competition in the market. In particular, we study the duopoly model of competition, under both Bertrand and Stackelberg conjectures.