<p>Consumer product valuation uncertainty may trigger disappointment aversion, and may lead to consumer virtual showrooming, i.e., viewing the products in virtual showrooms online and purchasing the products offline. This study examines the online channel virtual showroom strategies with consumer disappointment aversion in both monopolistic and competitive markets, and inspects consumer incentives for choosing virtual showrooming with the same or different virtual view costs. The findings show that virtual showrooms have the offline retail price increase effect, the disappointment aversion mitigation effect and the consumer screening effect. In a monopolistic market, disappointment aversion induces more consumers to choose virtual showrooming when the virtual view cost is sufficiently low, indicating that the monopolistic retailer can benefit from consumer disappointment by establishing a virtual showroom. However, in a competitive market, either a higher product fitness probability or a lower disappointment aversion level helps the online channel maintain its price advantage, although the screening effect harms the offline retailer as the virtual view cost increases. The competitiveness of offline channels weakens as consumer disappointment aversion level decreases and virtual view cost increases, and the online channels benefit more from the virtual showroom in the competitive market than in the monopolistic market. Virtual showrooms encourage consumers who are sensitive to travel costs to switch from online to offline channels when they all have the same virtual view cost, but may not when they have different virtual view costs. Consumer virtual showrooming intensifies channel competition, and aggressive pricing decisions may negatively impact social welfare.</p>

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Virtual showroom strategies for online channels with consumer disappointment aversion

  • Chunxia Li,
  • Ruozhen Qiu,
  • Minghe Sun

摘要

Consumer product valuation uncertainty may trigger disappointment aversion, and may lead to consumer virtual showrooming, i.e., viewing the products in virtual showrooms online and purchasing the products offline. This study examines the online channel virtual showroom strategies with consumer disappointment aversion in both monopolistic and competitive markets, and inspects consumer incentives for choosing virtual showrooming with the same or different virtual view costs. The findings show that virtual showrooms have the offline retail price increase effect, the disappointment aversion mitigation effect and the consumer screening effect. In a monopolistic market, disappointment aversion induces more consumers to choose virtual showrooming when the virtual view cost is sufficiently low, indicating that the monopolistic retailer can benefit from consumer disappointment by establishing a virtual showroom. However, in a competitive market, either a higher product fitness probability or a lower disappointment aversion level helps the online channel maintain its price advantage, although the screening effect harms the offline retailer as the virtual view cost increases. The competitiveness of offline channels weakens as consumer disappointment aversion level decreases and virtual view cost increases, and the online channels benefit more from the virtual showroom in the competitive market than in the monopolistic market. Virtual showrooms encourage consumers who are sensitive to travel costs to switch from online to offline channels when they all have the same virtual view cost, but may not when they have different virtual view costs. Consumer virtual showrooming intensifies channel competition, and aggressive pricing decisions may negatively impact social welfare.