Abstract
Are brand names more valuable online or in traditional supermarkets? Does the increasing availability of comparative price information online make consumers more price-sensitive? We address these and related questions by first conceptualizing how different store environments (online and traditional stores) can differentially affect consumer choices. We use the liquid detergent, soft margarine spread, and paper towel categories to test our hypotheses. Our hypotheses and the empirical results from our choice models indicate that: (1) Brand names become more important online in some categories but not in others depending on the extent of information available to consumers — brand names are more valuable when information on fewer attributes is available online. (2) Sensory search attributes, particularly visual cues about the product (e.g., paper towel design), have lower impact on choices online, and factual information (i.e., non-sensory attributes, such as the fat content of margarine) have higher impact on choices online. (3) Price sensitivity is higher online, but this is due to online promotions being stronger signals of price discounts. The combined effect of price and promotion on choice is weaker online than offline.
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