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Featured Research
A December 2004 research study by Professor Erik Brynjolfsson, Director of the Center for eBusiness at the MIT Sloan School of Management, “Search and Product Differentiation at an Internet Shopbot,” reports that “serious” shoppers on the Web focus on more than just price before making online purchase decisions. A number of other factors, such as perceptions of the retailer’s trustworthiness and reliability, amount of time for delivery, and brand name, were equally influential.
The study, by Brynjolfsson and co-authors Astrid Dick of the Federal Reserve Bank of New York and Micheal Smith of Carnegie Mellon’s Heinz School of Public Policy and Management, examined more than 10,000 searches by consumers looking for a specific book using DealTime.com, an well-known Internet “shopbot” (an online price comparison shopping Web site). The study found that shoppers who looked at only the first screen presented by DealTime in response to their search were the most price sensitive. However, for those who looked at more than one screen, the other factors noted above played an important role in the decision-making process. These shoppers were less likely to pick the least expensive choice, instead opting to pay slightly more for the product from a retailer who they were perhaps more familiar with or which offered faster delivery time.
According to Brynjolfsson, the study shows so-called “perfect competition” on the Internet has not destroyed the value of brands, and that the smart business will not focus totally on price, but also use the Internet to highlight the other factors consumers found important, as well.
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