Since the emergence of electronic commerce, the web has been used as a way for organizations to segment the market and enable price discrimination — i.e., offering different prices to individuals shopping online compared with individuals shopping offline. This has typically resulted in a situation in which consumers shopping online for books, CDs, and even cars pay a lower price than individuals shopping offline.
In a recent study of the use of infomediaries in the auto retailing industry, researchers from RPI and the University of Maryland have identified a mechanism that involves price discrimination within the online channel rather than between the online and offline channel. By examining the detailed search process of consumers and specifically the use of online buying services (OBS, websites specifically focused on the provision of information) as part of the purchase process, researchers demonstrate three distinct clusters — price OBS, product OBS, and portals — associated with the consumer search process.
Further, the research shows that the usage of these different clusters is associated with significant differences in price paid. Individuals utilizing product OBS paid more than individuals utilizing price based websites or portals. The authors found that the underlying differences in search behavior were associated with consumer characteristics.
For retailers, the results suggest that OBS usage can be implemented as a low cost and effective self-selection mechanism for price discrimination in industries with the flexibility to negotiate price. Consumers who are referred from sites which tend to offer production information are likely to be more valuable than those from price focued sites.
In the increasingly competitive and information intensive shopping processs, knowing how consumers go about gathering information can help retailers to more effectively segment and serve customers. Infomediaries can play an important role in this process.
The full research article associated with this work has been published in the Journal of Marketing http://www.atyponlink.com/AMA/doi/abs/10.1509/jmkg.71.3.89?cookieSet=1&journalCode=jmkg.