How do in-store consumers respond to mobile promotions
Xin Liu Ph.D.
Associate Professor of Marketing
International Business and Marketing Department
California State Polytechnic University, Pomona
Phone: 909-869-3780
Email:
Jing Hu, Ph.D.
Associate Professor of Marketing
International Business and Marketing Department
California State Polytechnic University, Pomona
Phone: 909-869-2442
Email:
How do in-store consumers respond to mobile promotions
The penetration of mobile devices into our daily lives has profoundly changed consumers’ behavior. Due to the time- and location-sensitive nature of the mobile devices, marketers are able to communicate with consumers anywhere and anytime (Shankar etal. 2010; Shankar and Balasubramanian 2009;). This means that mobile promotions will enter consumers’ decision making process at any given time. For example, as consumers are shopping in the retails stores, they may receive sales promotion offerings from smartphones. How consumers compare in-store product offerings with the mobile ones? And how would such comparison affect their purchase decision making? Answers to these basic questions will advance our knowledge about consumers’ decision making in the era of mobile commerce and provide managerial implications regarding the effectiveness of mobile promotion programs.
This study focuses on consumers’ in-store responses to mobile promotions. This is a unique situation for mobile marketing and different from the traditional online shopping via desktop computer. First, consumers’ presence in the retail stores highlights the endowment effect (Kahneman and Tversky1979; Kahneman, Knetsch and Thaler 1980). The theory suggests that the price that consumers are willing to accept to give up their current holdings is significantly higher than the price that consumers are willing to pay to acquire the product. In our study context, consumers who are already shopping in the stores may already touch and feel the product or even put the products in their shopping baskets. Such in-store experiences create the “endowment effect” such that consumers will demand a significantly higher price to switch to mobile shopping. Thus, we propose:
H1: Consumers will choose to buy from retail stores even when the mobile promotion offersa slightly lower price than the in-store offering.
Literature also suggests that the endowment effect will be more obvious for hedonic products than for utilitarian products (Chan 2015). Therefore, we propose that:
H2: Consumers require a deeper price discount for hedonic products than for utilitarian products to switch from in-store shopping to mobile shopping.
In addition, we suggest that brand familiarity will moderate the endowment effect. When consumers are familiar with the brand, this will reduce the uncertainty associated with online purchase. Thus, this will reduce the degree of “endowment effect.” Thus, we propose:
H3: Brand familiarity moderates the endowment effect such that consumers who are familiar with the brand will switch to mobile promotions with a lower price discount than those who are unfamiliar with the brand.
An experimental study with 2 (price difference: 10% vs. 30%) X 2 (Product categories: utility product vs hedonic products) X 2 (brand familiarity: high vs. low) will be conducted. The findings will for the first time address consumers’ responses to mobile promotions in the context of in-store shopping. The results of this study will help us understand how marketers can improve strategies targeting mobile users.
References:
Chan, Eugene Y. (2015), “Endowment Effect for Hedonic but not Utilitarian Goods”, International Journal of Research in Marketing, 32, 439-441.
Kahneman, Daniel, Jack L. Knetsch, and Richard H. Thaler (1991), “The Endowment Effect, Loss aversion, and Status Quo Bias,” Journal of Economic Perspectives, 5 (1), 193-206.
Kahneman, Daniel, and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (2), 263-291.
Shankar, Venkatesh and Sridhar Balasubramanian (2009), “Mobile Marketing: A Synthesis and Prognosis,” Journal of Interactive Marketing, 23, 118-129.
Shankar, Venkatesh, AlladiVenkatesh, Charles Hofacker and Prasad Naik (2010), “Mobile Marketing in the Retailing Environment: Current Insights and Research Avenues,” Journal of Interactive Marketing, 24, 111-120.