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How to Sell Products on the Web
Managers should tailor their
marketing strategies to the consumer’s decision stage.
Research by Wendy Moe
Researchers have long believed that consumers make
purchase decisions in two stages. In the first stage (stage
1), consumers select a smaller group of products from the
wide choice that is available to them. In the second stage
(stage 2), consumers select and purchase a product from this
smaller set. Because it is very difficult to observe the
first stage, researchers have several theories about
consumer behavior in that stage but little empirical
evidence. Dr. Wendy W. Moe, assistant professor of marketing
at the Smith School, in her paper “Empirical 2-Stage Choice
Model with Varying Decision Rules Applied to Internet
Clickstream Data,” examines both these stages using data
from online purchases.
Moe’s research shows that consumers are looking at
different product attributes in the two stages. Consumers
also tend to do a simpler mental analysis in stage 1
compared to stage 2. Moe’s study also reveals that there may
be some preliminary evidence that consumers consider product
attributes such as price and size only in one of the two
stages; whereas other product attributes are considered in
both stages. From a managerial perspective, Moe’s results
have strong implications for product marketing strategies.
Moe collected seven months of data from a retailer of
nutritional products. She then focused her analysis on the
two most popular products categories on the Web site: weight
loss aids and meal replacements. She looked at data from the
purchasing activities of 142 buyers in the weight loss aid
category and 143 buyers in the meal replacement category.
Buyers in the weight loss aid category accounted for 420
stage 1 and 278 stage 2 choices. Buyers in the meal
replacement category accounted for 438 stage 1 and 295 stage
2 choices. The data she collected captured the specific page
requests made by shoppers. For weight loss aids she
identified six attributes: price, size, brand, ephedrine,
caffeine, and St. John’s Wort. For meal replacements, she
identified five attributes: price, size, brand, flavor, and
protein.
Moe found that in stage 1, where consumers are screening
the wide choices available to them to select a smaller set,
they tend to use simpler mental decision rules than in stage
2, where they are making purchase decisions on the products
in the selected smaller set. Price and size tended to be
important in only one of the two stages, whereas ingredient
attributes play a role in both stages. Flavor tended to be
more important in the second stage than the first stage.
The research findings have strong implications for
promotional design and targeting. From a managerial
standpoint, it is important to identify which product
attributes are being used for screening decisions (stage 1),
for purchasing decisions (stage 2) and for both. This
information combined with the knowledge of how a product is
performing in the two stages can enable managers to devise
better targeting strategies. Also, if consumers show a high
preference for variety in stage 1, it possibly indicates
greater consumer uncertainty and therefore perhaps a need
for more education in the form of product information.
Although these results may be applicable to other
products, Moe is quick to point out that her analysis was
done on weight loss aids and meal replacements. Thus, it is
not entirely certain that analysis of other products will
reveal similar results.
Moe recommends that marketing managers identify the
product characteristics that are important in each stage,
and then promote their products based on how the product is
performing in each stage. Managers should look at the
strengths and weaknesses of the product in each stage and
then select an appropriate intervention.
The availability of Internet commerce data has opened up
the possibility of a flood of related research. Moe plans to
continue to explore the data-rich world of Internet
shopping. “I am interested in tracking a customer right from
the point that they visit the Web site to the point that
they make a purchase or no-purchase decision,” says Moe.
“Eventually, I hope my research generates a model which
allows me to make probabilistic predictions as to whether a
customer will buy something or not.”
“Empirical 2-Stage Choice Model with Varying Decision
Rules Applied to Internet Clickstream Data” was published in
the Journal of Marketing Research. For more
information about this research, please contact
wmoe@rhsmith.umd.edu. |
