Research

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Teaching

Started: 201606

“Gleaning Inferences from Soldout Products,” Xin Ge, Paul R. Messinger, and Yuanfang Lin

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Although the Internet is transforming retailing, Canadian retailers have not kept up with their American counterparts. In particular, an assessment by Web-metrix, found that five of the top ten retail sites visited by Canadians were American. Even the number-one retail site visited by Canadians was American: Amazon.com attracted nearly 25% more unique Canadian visitors than did its Canadian rival, Chapters.ca (Web-metrix, 2000). Addressing shortfalls like these, by understanding what leads to on-line retail success, will be critical to Canada’s success in an information-based economy.

Our objective is to increase understanding of consumer decision-making in each stage of interaction with electronic commerce sites. Our research and training activities involve the specific topics listed below:

Topics of Study

1. Consumers Attracted to Site

• Web Traffic Generators
• Internet Diffusion Patterns
• Determinants of Loyalty to Websites

2. Consumers Interact with Site

• Web Design Success Factors
• Website Personalization
• Building Customer Relationships with Technology
• Real-Estate E-Commerce

3. Consumers Act: Decision- Making in E-Environments

• Electronic Decision Aids
• Personalized Product Recommendations
• Factors Influencing Customer Preferences
• On-line Auctions
• Internet Matching Systems

4. Consumer and Business Outcomes

• Web Performance Measures
• Effectiveness of E-Advertising
• Internet Pricing Issues
• Impact of Internet on Channel Power

In the new economy, understanding consumers’ actions and perceptions as they progress through the ‘web-interaction cycle’ is central for Canadian business to achieve on-line competitiveness, for consumers to better utilize new electronic capabilities, and for the government to establish a level playing-field among providers of retailing and services.

Our Results: What We Have Learned So Far

We are excited about our conclusions to date and our ongoing work, summarized below:

New Methods for E-Commerce:

Website Performance Measures. We developed a new measurement scale that enables us to better benchmark the performance of the websites of our retail partners against norms obtained from a sample of Canadian retailers and from U.S. websites.

Product Recommender Systems. We improve on current e-commerce practice of providing recommendations ranked solely in order of highest expected utility. Our search algorithm (which we call "Generalized Leaps and Bounds"), instead, displays a targeted, but diversified, set of product recommendations that is more likely to help Canadian websites satisfy customer needs.

On-line Consumer Behaviour Results: 

Skill-based Habits. In the lab, repeated use of a website creates loyalty in the form of "skill-based" habits. Established websites, with large numbers of repeat users, benefit from this distinct source of loyalty. (This loyalty increases with practice, with task-complexity, and with consumers whose time valuation is higher.) In clickstream market data, we similarly find considerable consumer loyalty to Internet portals that were the first service providers in the industry. This work shows that Canadian businesses must learn to leverage off of entrenched consumer habits or to motivate Canadians to develop new skill-based habits.

Personalization Systems. In the lab, we find that customers greatly benefit from real-time aids in navigating and decision-making. We, accordingly, are developing unobtrusive technologies for personalization of the website interface that will help make Canadian retailers more competitive.

Preference Construction in E-Auctions. In the lab and field studies on e-bay, final auction prices tend to increase as the stated reserve price increases or as the fixed price component (delivery charges) increase. This work suggests that consumers need to be educated so they are not induced by the auction environment or by "bidding frenzy" to overpay.

Current E-Commerce Practices:

Internet Success Factors. We examine Internet success factors by studying the recent histories of a dozen leading Internet companies. Some conclusions: (a) A shakeout is ongoing in the search engine sector between Yahoo/Overture and Google, as new distinctions and relationships are emerging between portals, search engines, and Internet service providers. E-commerce providers need to understand how customer traffic patterns to their sites are influenced thereby, and Canadian retailers must cope with an environment in which U.S. firms, by virtue of past performance, come up first when customers run Internet searches. (b) A new paradigm of distribution of music and digital valuables (such as photos and film) is emerging due to Napster and its disciples, and the current copyright infringement cases will shape much of the future for this industry. The important role that Canada can play in this process is still being determined. (c) The questionable experiment in media convergence of AOL-Time Warner need not be emulated in Canada.

Cause Marketing Web Practices. By assessing a large number (3,414) of web links between a sponsoring company and a charitable organization, we find that most brands mention or link to the charities they sponsor, but very few charities link to the corporations that sponsor them. This suggests differential benefits for the charities and the sponsoring firms.

Historical Comparison:

Gold Rush Comparison. The Internet boom-bust cycle from 1995-2000 paralleled the gold rushes of the 19th and 20th centuries. The rush of young people and booming stock market is giving way to industry consolidation and enduring changes on the part of consumers, businesses, and government. Canada needs to shape its regulatory environment to encourage steady development and application of the technology, without fostering a boom/bust cycle.

Ongoing Work

1. We are working on a theory of expert recommendation systems/matching systems.

2. We are studying whether power in the real estate industry has shifted to consumers.

3. We are analyzing clickstream data provided by our partners to study web traffic generators and web design success factors.

4. We are developing educational curricula summarizing Internet success factors.

Research Methodology

Laboratory Experiments, Field Tests, Case Studies, and Human-Machine Interface Design. From marketing, computing science, cognitive psychology, industrial economics, and management.

Our Partners: Participants in Our Research Alliance

We are an alliance between thirteen co-investigators and fourteen retail businesses and associations. The co-investigators, from five Canadian universities (Alberta, British Columbia, Dalhousie, McMaster, and Toronto), integrate marketing, computing science, behavioral research, and economics with management practice. The retail business and associations include the Alberta Real Estate Foundation, Campers Village, CompuSmart, Deeley Harley Davidson, Forzani Group Ltd, Fountain Tire, Headcount, Henry Singer Fashion Group, Telus Geomatics, The Running Room, United Cycle, University of Alberta Bookstore, Web Mystery Shoppers, and West Edmonton Mall.

Such an alliance provides substantial synergies between theory and practice, helping to yield findings that are both conceptually sound and practical.

Impact on Canada

Our results will help Canadian businesses to utilize electronic commerce best practices, consumers to become more sophisticated on-line users, and government to establish equitable growth.

See: http://www.business.ualberta.ca/pmessinger/research alliance.htm

Contact: Paul Messinger (PI) paul.messinger@ualberta.ca

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Best Track Paper, Marketing Strategy & Management Track, American Marketing Association 2010 Summer Marketing Educator's Conference, "Leaving the Tier: Asymmetric Pricing Patterns in Online High Tech Shops," Charles A. Wood, Sourav Ray, Paul Messinger 

Nominated for Best Paper, Wood, C. A., Ray, S., Messinger, P."Analyzing Information Intermediaries in Electronic Brokerage," Hawaii International Conference on Systems Science (HICSS), Honolulu, HA, January 2010.

Outstanding Research Paper Award, for best paper published in International Journal of Business Strategy in 2007. “Competitive Pricing Behavior Among Channel Members: An Experimental Approach,” Sungchul Choi and Paul Messinger, International Journal of Business Strategy, 7, 2, 2007. 

Nominated for Best Conference Paper at American Association for Artificial Intelligence (AAAI) 2005. “Optimal Recommendation Sets: Covering Uncertainty over User Preferences,” Bob Price and Paul Messinger. April 2005. “Proceedings of the Twentieth National Conference on Artificial Intelligence and the Seventeen Innovative Applications of Artificial Intelligence Conference (AAAI Press: Menlo Park, California) pp. 541- 548. 

Finalist for the John D.C. Little Award for Best Marketing Paper in 1997 in Marketing Science or Management Science. “A Model of Retail Formats based on Consumers’ Economizing on Shopping Time,” Paul R. Messinger and Chakravarthi Narasimhan, Marketing Science, 1997, Vol. 16, No. 1, 1-23. 

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Working Papers Series

Our main emphasis has been on research and production of papers and managerial summaries. With already over two dozen papers online, we still have another batch of projects for which working papers and managerial summaries are underway which will be placed online within this year.

e-Auction Website

campusauctionmarket.com: This e-auction website is a service to the Edmonton community, including partnerships with local charity auctions, and as field research on effective electronic auction practices

Objective of the Research Alliance

Our objective is to increase understanding of consumer decision-making in each of four stages of interaction with electronic commerce sites. In the new economy, understanding consumers' actions and perceptions as they progress through the 'web-interaction cycle' is central for Canadian business to achieve on-line competitiveness, for consumers to better utilize new electronic capabilities, and for the government to establish a level playing-field among providers of retailing and services. Our secondary objective is, thereby, to help retail businesses, consumers, and governments function better in the new economy.

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• “Dual Rules for Service Evaluation” (2013), Service Science, Erik Rolland, Ray Patterson, Paul R. Messinger, Keith Ward, and Adam Finn, 5,4 (December), 279-295, Lead Article.  
  
• Chun (Martin) Qiu and Paul R. Messinger (2013), “Pricing Decisions of Skill-based Products: the Role of Used-product Markets,” Journal of Revenue and Pricing Management, advance online publication 29 November, doi:10.1057/rpm.2013.36 .  
• “Municipal Service Delivery: A Multi-Stakeholder Framework,” (2013) Human Factors and Ergonomics in Manufacturing and Service Industries, Paul R. Messinger, 23, 1, 37-46.  
• “Multi-Component Systems Pricing: Rational Inattention and Downward Rigidities” (2012) Journal of Marketing, Sourav Ray, Charles A. Wood, and Paul R. Messinger, 76, 5 (September), 1 – 17, Lead Article.
• “A Tale of Two Pricing Systems for Services” (2012), Information Systems and e-Business Management, Lyons, K., Messinger, P. R., Niu, R. H. & Stroulia, 10, 1 (March), 19-42, in a special issue on “Collaborative Value Creation in e-Business Management.”  
• “Negative Option Billing: Current Practice and Future Concerns” (2011), Asian Pacific and Globalization Review, Paul R. Messinger, Yuanfang Lin, Yujing (Sabrina) Yan, 1, 1 (invited contribution for inaugural issue). Coverage from CBC, CTV & several Canadian newspapers.   
• “Consumer Perceptions of Ambiguous Price Promotions: Scratch and Save Promotions versus Tensile Price Claims” (2010), Journal of Product & Brand Management, Sungchul Choi, Xin Ge, Paul R. Messinger, 19, 7, 477-486.  

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