Consumer Search of Multiple Information Sources and its Impact on Consumer Price Satisfaction

Abstract

When making important purchase decisions, consumers often consult multiple information sources. This paper examines how consumers allocate their search time across offline and Internet sources using survey data from new automobile purchases. Our analysis shows how time spent on Internet sources interrelates with time spent on offline sources, such as car dealerships, and vice versa. Furthermore, we examine whether longer search times imply higher price satisfaction as an outcome of search. A simultaneous equations Tobit model with latent classes is used. Analysis of a decade of survey data reveals two automobile purchaser segments of which the larger one accounts for 91% of observations. Based on this, we find that (1) specific website types can complement or substitute for offline information sources and for each other and (2) longer search times result in increased price satisfaction but only on specific information sources. Our findings provide automobile manufacturers and dealers an insightful way to utilize and manage different sources for product and price information provision.