Study of reference prices and bundle preferences online versus offline

Abstract

The e-commerce market is a rapidly growing market throughout the world, and especially in developing countries. In developing countries like India, where this industry is in a growth phase, the focus of e-commerce players is on getting reach to as much customers as possible. This has resulted in the top e-commerce players contending mainly on the price front. In this online context, the evaluation of prices by customers poses an interesting question before marketers – how are the online prices perceived by the buyers? This study compares reference prices of products in the online and offline context. In the process, this study also tries to capture the change in responses when the respondents were subjected to different cognitive loads. Though the estimated marginal means for the observation set support the hypothesis of online reference price being lower than offline reference prices, the ANOVA results fail to validate any of the hypotheses for reference prices. Bundles and ‘product combos’ form another attractive value proposition that differentiates online platform from offline platform. The second part of this study focuses on consumer preference for dependent and independent bundles, both in the online and offline context. The estimated marginal means indicate an inclination towards dependence bundles, the ANOVA results again fail to validate any of the hypotheses.