Price Search in the Retail Grocery Market

Abstract

The literature has produced an incomplete understanding of factors explaining the variance in price search in markets in which search is a regularly occurring activity. The authors develop a model of price search in the retail grocery industry by expanding the classic cost-benefit model and integrating psychosocial returns and concepts from human capital theory. The results indicate that prior investment search and market mavenism explain significant amounts of variance in price- and specials-related search, respectively, beyond that accounted for by economic costs and returns. The authors further explore the habitual nature of price search in this industry, consider the implications of the social value of price-specials information, and discuss the indirect impact of demographic characteristics. They consider implications for pricing strategy and competition, including reasons why previous research has found that executives overestimate consumer price search.