Work

Learning from customer interaction: How merchants create price-level propositions for experience goods in hybrid market environments

Year: 2014

Type: article

Abstract: For hybrid merchants, who sell goods simultaneously through digital media and conventional channels, creating a price proposition is a major and controversial decision. We model the interaction between hybrid merchants and their customers within the context of an experience goods market; and we study how merchants and customers both learn from this interaction to make optimum decisions. The equilibrium solution of the proposed game shows that experience goods’ loyal customers tend to switch channels, make repeat purchases online, and avoid learning alternative value propositions. And the optimum strategy for hybrid merchants involves higher prices that rely on solid branding and knowledge of the clientele. The findings also yield important managerial implications.

Source: Computers in Human Behavior

DOI: 10.1016/j.chb.2014.10.013

Authors: Antoni Meseguer-Artola, Inma Rodríguez-Ardura

Institutions: Universitat Oberta de Catalunya, Internet Interdisciplinary Institute

Language: English

Topic: Consumer Market Behavior and Pricing

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,780

Funder: Fundación Ramón Areces