traditional and is-enabled customer acquisition on the...
Post on 28-Jun-2020
0 Views
Preview:
TRANSCRIPT
Traditional and IS-Enabled Customer Acquisition
on the Internet
Choi J.; Bell D.R.; Lodish L.M.; Management science v.58 no.4 , pp.754-769 , 2012
1
20081351 Fahad 20123373 신정연
• Why Wal-Mart didn’t have to worry about the online mall (e.g. Amazon) 5 years ago.
• Today, however, half of Wal-Mart customers say they’ve shopped at both merchants.
• Because the discounter’s traditional customers are getting more tech-savvy.
• In last fiscal year, Amazon posted 41% revenue growth vs 8% at Wal-Mart.
• So, Wal-Mart has increased its investment in its online business.
2
Introduction (Case)
Basic concept
• Customer benefits from using online retailers include – Lower prices – Greater convenience
• Convenience is determined by – Time distance: Shipping time proximity of an
Internet purchase to a customer – Travel distance: physical travel distance from the
customer’s location to the nearest offline stores
3
Basic concept
• Target customer density – Interdependency among target customers
induced through density creates a synergistic effect
– generates offline & online shopping demand – amplifies customer’s propensity to communicate
or observe each other’s behavior → additional effect on offline and online WOM
4
Spatiotemporal evolution of Netgrocer.com buyers in Pennsylvania
5
Basic concept
• What is WOM(Word of mouth)? – Oral or written form of promotion in which
satisfied customers tell other people how much they like a business, product, service, or event.
• Advantages of WOM – Effectiveness of recommendation – Big effect with low price – Encourages better products and services – Strengthen brand image
6
Basic concept
• WOM is – 7 times as effective as
magazine advertising – Twice as effective as
radio advertising – Engendered by “benefit matching”
• Benefit matching: the recipient of a WOM recommendation experiences a positive fit with the information conveyed and the product or service recommended.
7
Data and Measures
• Zip Code-level Cumulative numbers of new buyers at Childcorp.com – Childcorp.com is leading internet retailer selling a
large selection of children’s necessities – ask shoppers from childcorp.com “How did you
hear about our website?”
8
Data and Measures
– Answers are classified into the four mutually exclusive categories
• Offline WOM: personal referrals from acquaintances and accidental referrals from unacquainted people in local regions
• Online WOM: referrals through online message boards, blogs and online communities
• Online search: paid and organic keyword search from search engines
• Magazine advertising: ads in an affiliated magazine targeted at the customer group
9
Data and Measures
– Model zip code-level counts of new buyers acquired through each of the four processes
– Why zip code-level? • Practical in terms of data requirements and
managerially useful as many retailers collect sales information at the zip code level
10
Data and Measures
• Focal variables: – Target customer density – Location-based convenience benefits
• Control variables: – Online price benefit – Magazine circulation – High-speed internet access – Geodemographic characteristics
• Spatial clustering of zip codes
11
< Summary statistics for model covariates > 12
Empirical model
• 𝑦𝑘,𝑧 𝑚 ~𝑃𝑃𝑃𝑃𝑃𝑃𝑃(λ𝑘,𝑧 𝑚 ) • 𝑦𝑘,𝑧 𝑚 : the number of new buyers
acquired by process k in zip code z in regional cluster m
13
Empirical model • λ𝑘,𝑧(𝑚)is modeled as a function of
– target customer density – location-based benefits – the number of target customers – a set of control variables that capture observed
heterogeneity – unobserved baseline by regional cluster – zip code-level measurement error
mkk
kmz
k
mzkkmzk
mzkkmzkmzk
n
x
x
,0,
)(
)()(,
)(,)(,)(,
)log(
)(
)log(
αα
ψ
ϕβ
εβλ
++
⋅++
(⋅∆+
⋅=′
+′=
z(m)
z(m)
Controls
benefits) based-Location
densitycustomer Target
14
< Parameter estimates from the model >
15
Empirical findings • Target customer density
– Target customer density has positive and
significant effect on total new buyer acquisitions and on all four acquisition modes.
– The effect of target customer density is large for WOM acquisition compared to independent acquisitions.
16
Variable Offline WOM
Online WOM
Online search
Magazine ads
Total buyers
𝜑 (Target customer density)
0.071 0.064 0.034 0.033 0.048
Empirical findings
– As the firm penetrates locations with a higher target density, WOM will be the most effective acquisition mode.
– Conversely, as the firm penetrates into rather sparse areas of lower target density, online search and magazine advertising acquisitions will be more effective.
17
Empirical findings • Location-based convenience benefits and
Offline vs Online WOM acquisitions – Fast shipping has an positive and significant
effect on online demand. – Fast shipping is more effective in generating new
buyers through offline WOM than online WOM.
18
Time distance
Offline WOM
Online WOM
Total buyers
1-day 1.189 0.733 0.889
2-day 0.555 0.308 0.431
3-day 0.326 0.218 0.290
Empirical findings
– Offline WOM acquisitions are more sensitive to offline travel distance.
– The greater the expected distance a shopper in a given location must travel to an offline store, the greater the online demand.
19
Travel distance
Offline WOM
Online WOM
Total buyers
1-day -0.076 -0.044 -0.074
2-day 0.268 0.179 0.230
3-day 0.126 0.073 0.098
Empirical findings
• Control variables – The effect of saving on sales tax
• Positive and statistically significant for WOM buyers and for search buyers
• But, no effect on acquisitions through magazine advertising
– Magazine circulation • Increases in buyers via online search and
magazine advertising
20
Empirical findings
• Control variables – Geodemographic control variables
• Online demand is higher in zip codes with higher population growth rates, more college educated and wealthy individuals, etc.
21
Empirical findings
• New managerial insights – IS-enabled methods of acquisition are
important in the new Internet retail economy, but traditional methods remain vital in a complementary manner.
22
23
Conclusion
• Acquisitions in general and WOM acquisitions in particular benefit from physical proximity among target customers.
• Location-based benefits enhance offline WOM acquisitions more than they enhance online WOM acquisitions.
• Acquisition modes are complementary and gains from geotargeting are possible.
24
References • Choi, J., S. K. Hui, D. R. Bell 2010. Spatio-temporal analysis of
imitation behavior across new buyers at online grocery retailer. J. Marketing Res. 47(1) 75-89.
• Anderson, E. T., N. M. Fong, D. I. Simester, C. E. Tucker. 2010 How sales taxes affect customer and firm behavior: The role of search on the Internet. J. Marketing Res. 47(2) 229-239
• http://en.wikipedia.org/wiki/Word-of-mouth_marketing • http://www.ehow.com/info_8430120_advantages-wordofmouth-
marketing.html • http://www.businessweek.com/articles/2012-03-29/why-wal-mart-
is-worried-about-amazon
25
top related