Money-back Guarantee Research Articles

Online Retailing Operations: Is It Wise to Offer Free Sample Trial and Money-Back Guarantee Together?

In retail operations, free sample trial (FST) and product return with money-back guarantee (MBG) both serve as important strategies to reduce consumers’ worries and valuation uncertainty. This paper is the first study which analytically examines when and whether an online retailer should provide both strategies simultaneously, and when one strategy outperforms the other. We consider an online retailer selling to consumers who are uncertain about the product values when making purchasing decisions. The retailer decides whether to offer MBG or FST. We develop analytical models to examine four strategies: strategy NN (both FST and MBG are not provided), strategy NS (FST is provided and MBG is not offered), strategy MN (FST is not provided and MBG is provided), and strategy MS (both FST and MBG are offered). Comparing among these four strategies, we find that when only FST is offered, the retailer surprisingly should decrease the price if the product cost is low. If the retailer only provides MBG, he will charge a higher price compared with the situation when MBG is not provided. When the size of free sample is very small, strategy NS (MS) is the optimal strategy if the product's cost is low (high). When the size of free sample is large, strategy MN is the optimal strategy. Then, we extend our model to consider three situations, namely: (a) the retailer offers coupons to consumers to experience the free sample, (b) consumer returns incur a cost, and (c) the size of free sample is endogenous. We find the main conclusion remains robust. Our findings may help explain some real-world practices, such as why some retailers (e.g., Amazon and Walmart) provide consumers with low volume toners to decrease the free sample cost; skincare product retailers such as Lancôme, Estee Lauder, and Guerlain implement both MBG and FST. We also interestingly show that a bigger size of free sample may not necessarily benefit consumers.

“Wait” to promote high sighting rates of wildlife in tourism: evidence from a wildlife disturbance experiment

ABSTRACT Ecotourism is often seen as beneficial for both people and nature, but unregulated wildlife tourism can harm wildlife. To improve management practices, we studied rabbit tourism involving Amami rabbits (Pentalagus furnessi) at a Natural World Heritage Site in Japan. The study aimed to determine the sighting rates of wildlife under different car schedules and density scenarios. Using wildlife disturbance experiments and model simulations, we estimated the recovery rate of rabbits after being disturbed by tourists. Our findings revealed that a 20-minute time lag between cars resulted in a 90% recovery rate for the rabbits. Additionally, a regular car schedule increased rabbit sighting rates by approximately 1.85 times compared to random schedules and 2.4 times compared to normal schedules under optimal conditions (maximum density and 50 cars). We also evaluated the profitability of tourism under different rabbit densities and money-back guarantee (MBG) rates. While introducing more cars increased profits, it decreased rabbit sighting rates and increased the likelihood of activating the MBG. In conclusion, our study showed that considering both animal behavior and human interests in developing a tourism management system can balance profitability and minimize the impact of overutilization.

Willingness to Pay for Nature Protection: Crowdfunding as a Payment Mechanism

AbstractIn this study, we use a discrete choice experiment to elicit the willingness-to-pay (WTP) for preventing and mitigating the effects of oil spills on marine and coastal ecosystem services, along a particularly vulnerable coastal region of mainland Portugal. We used a split-sample design to analyze the differences between two payment vehicles (PV): a mandatory extra income tax and a voluntary contribution collected by a crowdfunding campaign with a provision point mechanism and a money-back guarantee. The difference between the two PVs is examined in a setting where the local population has a negative perception of the quality of institutions. We find that respondents are more willing to contribute when presented with the crowdfunding version. Also, regardless of the payment vehicle, respondents who express a mistrust in institutions are more likely to choose the status quo. These results suggest the potential of using crowdfunding to support ecosystem services’ conservation initiatives.

Selling mode choice and return policy for advance selling in an e-commerce platform with social influence

Advance selling is increasingly employed to mitigate demand uncertainty, raise consumer awareness of products, and even exert social influence on subsequent sales. However, consumers may hesitate to pre-order products due to uncertainty about product valuation. As a response, sellers have begun implementing return policies and utilizing online retail platforms to alleviate the uncertainty. This study aims to investigate the interaction between return policies for advance selling and selling formats of e-commerce platforms considering the impact of social influence. We examine a two-period platform supply chain that includes agency selling, reselling, and hybrid selling formats with and without return policies. Using game theory models, we analyze pricing decisions and profits of each player under six possible scenarios. The results indicate that the manufacturer consistently prefers adopting a Money-Back Guarantee (MBG) return policy regardless of the selling format. However, the MBG return policy is not always advantageous for the platform, except in the case of low social influence. In such a case, the platform may implement the MBG return policy to boost advance sales, thereby enhancing the penetration power from advance sales to regular sales. Regarding selling formats, the platform and the manufacturer opt for the reselling and agency selling, respectively, when the commission rate is low; otherwise, they adopt the agency selling and hybrid selling, respectively. Furthermore, we explore the impact of critical drivers on the pricing decisions and profits within the platform supply chain. Our study offers valuable insights into implementing return policies and determining selling formats.

Marketing Signals Influencing Consumer Trust in Online Purchase Context: An Empirical Paper

Consumer trust is crucial in online purchase decisions, particularly for luxury goods as it involves few risks such as authenticity status, information asymmetry and the nature of online shopping which is absence of feel and touch. Based on signaling theory, this study aims to analyze four factors known as marketing signals which are brand reputation, online reviews, money-back guarantee and site aesthetics on consumer trust in the context of online purchase of personal luxury goods. Using SPSS and AMOS, this study analyzed 214 data collected from consumers in Malaysia who intend to purchase or has experience purchasing personal luxury goods online through either one of various online platforms such as official brand website, third-party platforms and social media commerce. The results from the analysis showed that brand reputation and online reviews positively and significantly influence consumer trust. However, money-back guarantee and site aesthetics were found to have non-significant influence on consumer trust. Luxury marketers must ensure to build strong brand reputation in order to gain consumer trust to purchase online. In addition, luxury marketers can also consider incorporating online reviews in their own unique way to enhance consumer trust while maintaining the luxury identity online.

Do buyer protection mechanisms help sellers? A model of seller competition in the presence of online reputation systems

In online markets, consumers rely on reputation systems to make purchases decisions. However, traditional accumulative-score type online reputation systems bring disadvantages to new sellers since they do not have sufficient transactions. In this paper, we investigate how do consumer decision making as well as seller competition change after introducing buyer protection mechanisms, such as escrow services and money-back guarantee. Do consumers rely less on online reputation systems after launching buyer protection mechanisms? Does introducing buyer protection mechanisms alleviate the competition pressure among sellers? Does a new seller benefit more than an existing seller? This paper proposes a theoretical model to discuss how online reputation systems affect sellers and consumers in the presence of buyer protection mechanisms. Contrary to the conventional wisdom that buyer protection mechanisms enhance buyer experiences and give low-reputation sellers advantages, we find that such scenarios occur only in the short term. In the long run, consumers rely more on online reputation systems as the effectiveness of buyer protection mechanisms increase. Both consumers and low-reputation sellers can be worse off. We also empirically assess these theoretical predictions.

Pricing for different return policies in an online marketplace considering appeasement during a post-return out-of-stock

No one can cast a shadow on the fact that returning a product is an integral part of any online retailing business. Thus, a well-designed return policy plays a pivotal role. This paper suggests a new formulation for the utility function applying to return policies enjoying product exchange scenarios. To use this proposed model, we extract four scenarios from some policies like time lenient return policy; monetary lenient return policy; exchange; and appeasement, which is paid during an out-of-stock that may occur when the customer returns the product. We consider a ratio that measures the effect of returning time duration on customer satisfaction to demonstrate the importance of the time leniency policy. Besides, we implement three notations to calculate the value of appeasement (financial compensation), taking place when an Out-Of-Stock happens in the process of returning the product. Models were formulated for an online retailing platform, including a retailer; an online marketplace; and a customer. After solving all mathematical models, formulated as a two-staged game theory, we extract that the profit of the online marketplace is twice more than the retailer in all scenarios, regardless of the value of the parameters. In addition, as we have considered the partial money-back guarantee in the fourth scenario, the results show that the value of the partial money-back guarantee has no impact on the profit of both the retailer and the marketplace since the price neutralizes this impact. Moreover, we have found out that the profit value of the retailer when he faces out-of-stock and chooses to pay financial compensation to the customer is so tight compared to the scenario in which he decides to supply the product. We illustrate the figures and depict that there are parameters that can make a difference rather than the scenario only.

321 Transfer of Care to a Clinical Nurse Specialist Pathway for Patients Undergoing Exogen Therapy Improves Outcomes, Compliance, and Refund Rate

Abstract Aim Exogen (low-intensity pulsed ultrasound) has been shown to improve union rates following delayed/non-union. It is accompanied by a money-back guarantee in unsuccessful cases, dependent on adequate patient compliance. Using a clinician-run pathway, our unit’s results were poor, so our aim was to create a clinical nurse specialist (CNS) pathway with protocols for recording outcomes, collecting data, and claiming refunds for unsuccessful cases. Method This was a single-centre, retrospective, multi-cycle audit performed over 60 months on patients undergoing Exogen treatment for delayed/non-union following elective foot and ankle arthrodesis. Data was collected on union rates, Exogen compliance, and refund collections. Results were compared (Chi-squared test) for the original cohort (n = 55) and the CNS-led cohort (n = 18). Results In the original cohort, 24 patients (43.6%) united (mean time 225 ±145 days). Only 14 (25.5%) had treatment compliance accurately recorded and compliance rate >95%. Of 31 patients whose Exogen treatment failed, only 7 (22.6%) were eligible for a treatment cost refund due to lack of compliance / record of compliance. In the CNS-led cohort, 12 (66.7%) patients united (mean time 190 ±77 days, p = 0.089). Sixteen patients (88.9%) had compliance accurately recorded (p<0.001), with increased compliance rates (>99%). Exogen treatment costs were refunded for 5 patients (83.3%) with residual non-union (p = 0.004). Conclusions Transferring patient care to a dedicated CNS-run pathway led to a non-statistically significant increase in union rates, and significantly improved compliance and fiscal return rates. Establishing dedicated protocols with paramedical staff can be cost-effective and improve outcomes, whilst reducing out-patient burden in surgical clinics.

Incorporating social learning into the optimal return and pricing decisions of online retailers

The biggest drawback of online shopping lies in consumers’ uncertainty about the product. Before making a purchase decision, consumers learn about the product from many sources which helps them infer whether a product meets their preferences, i.e., social learning. Social learning constitutes a positive or a negative signal about the product resulting in positive-type consumers and negative-type consumers. Also, many retailers offer money-back guarantees (MBGs) to reduce consumers’ mismatch risk. We analyze a retailer’s pricing and return policy decisions in the presence of social learning. Under both no returns and MBG, we find that when signal accuracy is low, it is optimal for the retailer to sell to both positive and negative-type consumers. When signal accuracy is high, it is optimal for the retailer to sell to only positive-type consumers. In addition, if no returns are allowed, social learning hurts the retailer when signal accuracy is low while social learning benefits the retailer when signal accuracy is high. If a MBG is offered, social learning always benefits the retailer. When consumers are heterogeneous in their belief about signal accuracy, if no returns are allowed, social learning benefits the retailer for a small match probability, whereas social learning hurts the retailer for a large match probability. Similar to the case of homogenous consumers, social learning benefits the retailer in almost the whole range of problem parameters if a MBG is offered. Moreover, we find that social learning can be a driving factor to the ubiquity of MBGs regardless of the heterogeneity of consumers. We also analyze the effects of quality effort investment, consumers’ full learning, consumers’ bounded rationality, and high salvage value on the retailer’s pricing strategy.

Optimal decisions in a remanufacturing supply chain under money‐back guarantees

AbstractThis study establishes a remanufacturing supply chain (RSC) consisting of a manufacturer and a retailer, in which the retailer offers a money‐back guarantee (MBG) with a full refund for consumers, and investigates the pricing decisions in four remanufacturing cases by considering the quality of returns. Our results show that controlling remanufacturing costs can enable both members to achieve a win–win situation in most remanufacturing cases. When the consumer's acceptance level for remanufactured products is low (high), a high return rate of non‐defective returns losses (benefits) the retailer's profit but does not losses the manufacturer's profit.

The Influence of Social Media Communication, Product Quality, and Promotion on Purchase Intention


 Abstract: In the last 10 years, Indonesia's beauty and personal care industry grew around 12%, with a market value of 33 trillion Rupiah in 2016. The business in Indonesia is predicted to experience the largest growth compared to other countries in Southeast Asia. This raises interest in analyzing the factors influencing consumer purchase intention in body care products. The purpose of this study was to analyze the influence of social media communication, product quality, and promotion on purchase intention. The data collection method is a survey method with questionnaires. The sample size was 105 respondents. Multiple linear regression analysis techniques were used to test the influence of the independent variable on the dependent variable. The study's results found that social media communication, product quality, and promotion positively and significantly influence purchase intention. The brand needs to build good relationships with consumers through social media to encourage purchase intention. In terms of quality, the brand should be able to create a unique and distinctive quality that consumers can accept. In the promotion aspect, the brand should show a responsible attitude when complaints occur, such as providing a money-back guarantee.

FIRST COME, FIRST SERVED: INVESTIGATING STRATEGIES TO OVERCOME CONSUMER LEAPFROGGING BEHAVIOUR

The phenomenon of ‘consumer leapfrogging’ represents a conscious shift of consumers’ purchase decision for an innovation to a future product generation, and results in lower-than-expected demand. As consumers skip product generations, new product diffusion for the initial innovation and corresponding company turnover is capped. While previous studies highlight the importance of consumer leapfrogging behaviour, effective marketing strategies to attenuate detrimental consequences are lacking. To close this research gap, this paper empirically tests the effectiveness of various marketing strategies (trade-in program, bonus program, money-back guarantee, and product bundles) as potential countermeasures to consumer leapfrogging via a scenario-based online experiment with a 5 (four marketing strategies and control group) × 2 (low/high radical product) between-subjects design. Our results reveal that trade-in and bonus programs as well as money-back guarantees are effective countermeasures to consumer leapfrogging behaviour. Furthermore, our findings also show that the effectiveness of the instruments decreases with the degree of product radicality.

Refundable income annuities: Feasibility of money-back guarantees

Refundable income annuities (IA), such as cash-refund and instalment-refund, differ in material ways from the life-only version beloved by economists. In addition to lifetime income they guarantee the annuitant or beneficiary will receive their money back albeit slowly over time. Although we document that refundable IAs now represent the majority of sales in the U.S., they are mostly ignored by insurance and pension economists. Indeed, their pricing, duration, and money's-worth-ratio is complicated by recursivity which will be explained, and we offer a path forward to make refundable IAs tractable.A key result concerns the market price of cash-refund IAs, when the actuarial present value is grossed-up by an insurance loading. We prove that price is counterintuitively no longer a declining function of age and older buyers might pay more than younger ones. Moreover, there exists a threshold valuation rate below which no price is viable. This may also explain why inflation-adjusted IAs have all but disappeared.

Money-Back Guarantees and Service Quality: The Marketing of In Vitro Fertilization Services

Marketing practices like money-back guarantees (MBGs) are prevalent in many expert-service markets but are often decried as marketing gimmicks that take advantage of vulnerable and poorly informed consumers. In this research, conducted in the market for in vitro fertilization services, the authors empirically assess differences in quality of care between clinics that offer MBG programs and those that don't, to investigate whether MBG programs can serve a purpose consistent with signaling and insurance theories. The analysis is conducted on a unique longitudinal data set that includes information on clinic-level treatment, outcome statistics, clinic characteristics, and marketing practices for fertility clinics in the United States, state-level insurance mandates, competition environments, and demographic and geographic characteristics. Using an instrumental variable approach to account for the endogeneity of MBG decisions made by fertility clinics, the authors find that MBG clinics, on average, offer better treatment outcomes in terms of success rates while undertaking lower risks. The results are consistent with signaling theory predictions that market-based programs like MBGs can serve as signals of unobservable clinic quality despite the incentives for clinics to engage in opportunistic behaviors.

Dynamic Pricing with Money‐Back Guarantees

Money‐back guarantees (MBGs), which allow customers to return products that do not meet their expectations, are widely used in the retail industry. In this study, we study a retailer's MBG policy with dynamic pricing of limited inventory. A key decision for the retailer is to decide whether to offer MBGs. When the product can be returned instantly, we find that the optimal MBG policy is a simple threshold policy: given the inventory level, it is optimal to offer an MBG if and only if the remaining selling time is longer than a threshold. Moreover, the threshold is decreasing with the inventory level. We also address the problem of dynamic pricing with positive return times. Due to the complexity, we analyze the associated fluid model, which has an infinite number of constraints. We consider a series of relaxations that have a nested structure and use the Lagrangian approach to explicitly solve these relaxed problems. This allows us to develop an iterative approach that is guaranteed to solve the fluid model in finite iterations. Our numerical analysis shows that the deterministic solution is asymptotically optimal for the stochastic system.

The Impact of Power Distance Belief on Consumers' Brand Preferences

Five lab studies and a field study explore how power distance belief (PDB) influences consumers' preference for mass-market versus niche brands, the underlying mechanisms, and boundary conditions. We find that high (vs. low) PDB consumers are more likely to prefer mass-market over niche brands because they tend to be risk averse, which in turn increases preference for widely used brands. Consequently, the relationship between PDB and brand preferences is mediated by risk aversion. Further, when product usage contexts are risky, low (but not high) PDB consumers' preference for mass-market brands increases, whereas offering an extended money-back guarantee increases high (but not low) PDB consumers' preference for niche brands. In addition, we find that when choosing service providers (versus choosing physical goods), low (but not high) PDB consumers are significantly more likely to prefer mass-market brands over niche brands. We conclude with the implications of these findings for marketers, such as for their segmentation and targeting endeavors. We also provide specific tools that marketers could use, both inside and outside the store, to influence consumers' preference for mass-market versus niche brands.

MP31-18 ONLINE MALE INFERTILITY SUPPLEMENTS: A GROWING MARKET WITHOUT GROWING EVIDENCE

You have accessJournal of UrologyInfertility: Therapy (MP31)1 Sep 2021MP31-18 ONLINE MALE INFERTILITY SUPPLEMENTS: A GROWING MARKET WITHOUT GROWING EVIDENCE Igor Inoyatov, Spencer Mossack, Michael Hung, Varun Talanki, James Rail, David Schulsinger, and Yefim Sheynkin Igor InoyatovIgor Inoyatov More articles by this author , Spencer MossackSpencer Mossack More articles by this author , Michael HungMichael Hung More articles by this author , Varun TalankiVarun Talanki More articles by this author , James RailJames Rail More articles by this author , David SchulsingerDavid Schulsinger More articles by this author , and Yefim SheynkinYefim Sheynkin More articles by this author View All Author Informationhttps://doi.org/10.1097/JU.0000000000002035.18AboutPDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsReprints ShareFacebookLinked InTwitterEmail Abstract INTRODUCTION AND OBJECTIVE: The current American Urological Association guidelines state no clear recommendation can be made for the treatment of male infertility using antioxidants. While many supplements have been shown in small, low quality studies to improve semen parameters, few, if any have been shown to actually improve natural conception rates or live birth rates. We aim to examine the current online market for male infertility supplements and evaluate the clinical evidence of their ingredients. METHODS: Amazon, Google Shopping and Walmart search engines were queried for currently available male infertility supplements. Customer reviews, supplement costs, claims and ingredient information were collected. The active ingredients were then compared with known supplements included in randomized controlled trials (RCTs) for subfertile men RESULTS: A total of 243 products were reviewed across the 3 online marketplaces and 30 distinct supplements were analyzed containing a total of 73 ingredients. We found that 70% of the products claimed to improve sperm motility, 63% claimed to increase sperm count, and 12% claimed to increase the chance of conceiving. The average 30 day cost per product was $35.10 and 4 products made “money back guarantees.” At least half the products contained Zinc (57%), Folic Acid (53%), L-Carnitine (50%) and Selenium (50%). The most reviewed product accumulated 1214 reviews with an average rating of 4.48/5 stars. Of the 73 ingredients reviewed, 58.9% of them have never been studied in human clinical trials on male infertility. In total, 12 of the 15 most common ingredients were cited in human clinical trials. Only 2/15 (13%) ingredients (Vitamin E and Zinc) have been shown to improve conception rates while 6/15 (40%) ingredients have been shown to increase semen parameters. CONCLUSIONS: The online market for male infertility supplements is saturated with products claiming to improve semen parameters and the chance of conceiving. While comparatively less expensive than artificial reproductive technology (ART), many include ingredients that have either not been found to have the advertised effect or have never been tested in human trials. Patients should be warned of the large number of male infertility products on the market that have little to no evidence of improving fertility, and may increase the burden of cost on patients who may eventually require ART. Source of Funding: N.A. © 2021 by American Urological Association Education and Research, Inc.FiguresReferencesRelatedDetails Volume 206Issue Supplement 3September 2021Page: e562-e562 Advertisement Copyright & Permissions© 2021 by American Urological Association Education and Research, Inc.MetricsAuthor Information Igor Inoyatov More articles by this author Spencer Mossack More articles by this author Michael Hung More articles by this author Varun Talanki More articles by this author James Rail More articles by this author David Schulsinger More articles by this author Yefim Sheynkin More articles by this author Expand All Advertisement Loading ...

Marketplace or reseller? Platform strategy in the presence of customer returns

This paper examines the selling strategy of an internet platform retailer in the presence of customer returns. A supplier may sell its product through the platform retailer and also through its own (direct) channel. The platform retailer may either be a reseller of the supplier’s product or a marketplace (charging a commission to provide platform services to the supplier, who sells the product through the platform). When the platform retailer is a reseller it offers a money-back guarantee (MBG) returns policy; when it is a marketplace, it requires that the supplier offer the MBG on sales through the marketplace. We identify the conditions under which the supplier should also offer an MBG in the direct channel. We identify the platform retailer’s optimal selling strategy (as marketplace or reseller) and the associated conditions. We show that the platform retailer should choose a reselling strategy if the selling efficiencies in both channels are either significantly different or sufficiently close, and otherwise the platform retailer should choose a marketplace strategy. The regions that achieve win–win for both supply chain members are identified.

Outsourcing strategy in the presence of the customer returns

In this paper, we examine a manufacturer's choice of outsourcing contractor, either a competing contractor or a non-competing contractor. Both the manufacturer and the competing contractor (which also produces a product in its own brand) face customer returns. We find that the manufacturer's optimal outsourcing strategy depends strongly on two factors: the efficiency of production and sale of its brand relative to that of the competing contractor in its own brand, and the ratio of the qualities of the two brands. The competing contractor, on the other hand, always prefers to produce for the manufacturer. Interestingly, we find that when the manufacturer chooses to outsource to the non-competing contractor, both the wholesale and retail prices of the manufacturer's product decrease, while they increase if the competing contractor is chosen. In addition, the competing contractor may be chosen even if it charges a higher wholesale price than the non-competing contractor does. We find that the manufacturer and the competing contractor should offer money-back guarantees if they can efficiently recover value from any returns. We further show that when a non-competing contractor is chosen, money-back guarantees offered by the manufacturer and the competing contractor can benefit at least one firm and may even achieve a win-win situation. When the competing contractor is chosen, both the manufacturer and the competing contractor can either benefit (Pareto improvement) or suffer (prisoner's dilemma) from money-back guarantees. These results are different from those in existing studies in the literature.

Money-back guarantee in the presence of strategic customer behavior

Anticipating future clearance markdowns, customers can choose purchase timing to maximize their expected utility. Taking into account such strategic consumer behavior, this paper conducts an analytical research for the optimal design of the money-back guarantee (MBG). Our work found that the degree of strategic consumer behavior can have crucial effects on the optimization of MBG. Specifically, offering an MBG in both the regular and clearance sale periods is optimal for the seller when the customers are highly strategic; otherwise, providing an MBG is optimal only during the regular selling period. In addition, customers can benefit from MBG. In particular, offering an MBG only during the regular selling period generates the highest surplus for consumers when they are comparatively highly strategic; otherwise, offering an MBG during both the regular and clearance sale periods is preferable. Furthermore, an MBG can achieve Pareto improvement for the seller and consumers only in the regular selling period with moderately strategic customers. Compared to extant literature, the fundamental contributions of this paper are (1) the revelation that the degree of strategic customer behavior is a critical factor when designing an MBG, and (2) the development of an analytical characterization of the optimization of an MBG in response to different degrees of strategic customer behavior. Our work well substantializes the result that an MBG policy can be an effective tool for addressing strategic customer behavior.