How Far Will You Travel to Save Money? The Moderating Effects of Product
Retail location is commonly cited as being a critical factor in a retailer’s success. In general, retailers located at less convenient locations charge lower prices to entice customers to their store. This research explores other ways retailers located at less convenient locations can compete. Building on resource allocation theory (Feldman and Hornik 1981), we posited and found that consumers are willing to travel without any expectation of price savings if the stock is certain to be available. Thus, indicating the retailers at more remote location can compete not only via price savings, but by simply ensuring that the item is in stock. However, since it is simply not feasible to ensure that every item will be in stock at all times, we investigated if simply offering a merchandise guarantee which promises to compensate the customer in some way if the item is not in stock would be sufficient to entice customers to shop at less convenient locations without price savings. Our findings support that it is. These propositions are modeled and then tested across two experiments.
Advertising and Promotion Management | Marketing
Roggeveen, Anne; Marmorstein, Howard; Kopalle, Praveen; and Grewal, Dhruv, "How Far Will You Travel to Save Money? The Moderating Effects of Product" (2010). Babson Faculty Research Fund Working Papers. 87.