Marketing Papers

Document Type

Technical Report

Date of this Version

2001

Publication Source

California Management Review

Volume

43

Issue

2

Start Page

56

Last Page

74

DOI

10.2307/41166075

Abstract

In this paper, we present a perceived shopping utility framework for analyzing the impact of retail price format on store choice, which in turn determines three key performance metrics: (1) number of shoppers, (2) number of trips, and (3) average spending per trip. Our approach is based on the premise that when choosing a store, consumers evaluate both the fixed and variable utilities of shopping. The fixed utility does not vary from trip to trip whereas the variable utility depends on the size and composition of the shopping list. We apply our model to summarize prior findings on store choice, analyze how retailers can improve their performance, and interpret the practices of leading retailers. Our framework can also accommodate situations when retailers face multiple segments who have different sensitivities to fixed and variable utilities. Finally, we discuss recent trends (e.g., online shopping) using our approach.

Copyright/Permission Statement

Tang, C., Bell, D., & Ho, T., Store Choice and Shopping Behavior: How Price Format Works, California Management Review 43, no. 2: pp. 56-74. Copyright © 2001 UC Berkeley Haas School of Business. Reprinted by permission of SAGE Publications.

This is a pre-publication version. The final version is available at http://dx.doi.org/10.2307/41166075

Keywords

price format, perceived shopping utility, EDLP, HILO

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Date Posted: 15 June 2018

This document has been peer reviewed.