Case Study Submission through Moodle Consumer Price Knowledge PHOTODISC GREEN/Getty Images case 16.1 A recent study investigated one major area of marketing decisions: pricing practices.8 Specifically, the study addressed consumer knowledge and attitudes about the practice of online retailers adjusting their prices according to customer characteristics, such as how frequently they buy from the retailer. Price discrimination has long been commonplace in many industries, but the Internet provides a way of implementing large-scale price discrimination. Realize that price discrimination isn’t always a bad thing for individual consumers as sometimes he or she is the beneficiary of a low price. For example, a rental car company may offer a consumer a low rate on a rental car if the person’s recent Web history has shown a search for hotels. Someone who goes straight to the rental car site may not get such a discount. Another website selling cameras charged different prices for the same model depending on whether the visitor to the site had previously visited sites that supply price comparisons. In general, price discrimination is legal unless it discriminates by race or sex or involves antitrust or price-fixing laws (such as two competitors agreeing to charge certain prices). The study consisted of telephone interviews conducted with a sample of 1,500 adults, screened to find persons who had used the Internet in the preceding thirty days. The questionnaire gathered demographic data and data about Internet usage. In addition, the interviewer read seventeen statements about basic laws and practices related to price discrimination and the targeting of consumers according to their shopping behaviors. Respondents were asked whether each of these statements was true or false. Case Exhibits 16.1–1, 16.1–2, 16.1–3, and 16.1–4 summarize some of the results from this study. Questions 1. The information provided here is not detailed enough for a formal report, but assume that you are making an informal report in a preliminary stage of the reporting process. Which of these findings do you want to emphasize as your main points? Why? 2. Prepare a written summary of the findings, using at least two tables or charts. 3. Prepare two tables or charts that would be suitable to accompany an oral presentation of these results. Are they different from the visual aids you prepared for question 2? Why or why not? CASE EXHIBIT 16.1–1 CASE EXHIBIT 16.1–2 Selected Information about the Sample Responses to Selected Knowledge Questions Response* Sex Male Female 48% 52% Source: © Cengage Learning 2013. Online Connection at Home Dial-up connection only 31% Cable modem (with/without dial-up) 18% DSL (with/without dial-up) 25% Cable or DSL with another method 13% Don’t know 4% No connection at home 9% Self-Ranked Expertise Navigating the Internet Beginner 14% Intermediate 40% Advanced 34% Expert 12% Source: Joseph Turow, Lauren Feldman, and Kimberly Meltzer, “Open to Exploitation: American Shoppers Online and Offline,” APPC report, June 2005, p. 15, downloaded at http://www.annenbergpublicpolicycenter.org. Don't False Know Statement True Companies today have the ability to follow my activity across many sites on the web. 80% 8% 12% It is legal for an online store to charge different people different prices at the same time of day. 38% 29% 33% By law, a site such as Expedia or Orbitz 37% that compares prices on different airlines must include the lowest airline prices. 32% 31% It is legal for an offline store to charge different people different prices at the same time of day. 29% 42% 29% When a website has a privacy policy, it means the site will not share my information with other websites or companies. 59% 25% 16% *When the numbers do not add up to 100%, it is because of a rounding error. Boldface type indicates the correct answer. Source: Joseph Turow, Lauren Feldman, and Kimberly Meltzer, “Open to Exploitation: American Shoppers Online and Offline,” APPC report, June 2005, p. 20, downloaded at http://www.annenbergpublicpolicycenter.org. (Continued) CASE EXHIBIT 16.1–3 CASE EXHIBIT 16.1–4 Responses to Selected Attitude Questions Predicting Knowledge Score from Selected Demographics Response* Statement Unstandardized Regression Coefficient (B) Standardized Regression Coefficient (b) Education 0.630* 0.200 Income 0.383* 0.150 Self-perceived ability to navigate Internet 0.616* 0.149 Constant 2.687 R2 0.148 Agree Disagree Neutral Don’t Know It’s okay if a store charges me a price based on what it knows about me. 8% It’s okay if an online store I use charges different people different prices for the same products during the same hour. 11% It would bother me to learn that other people pay less than I do for the same products. 76% It would bother me if websites I shop at keep detailed records of my buying behavior. 57% It’s okay if a store I shop at frequently uses information it has about me to create a picture of me that improves the services it provides for me. 50% 91% 87% 22% 41% — 1% 1% 2% 1% 1% 1% 1% *Significance <0.001 level. Source: Joseph Turow, Lauren Feldman, and Kimberly Meltzer, “Open to Exploitation: American Shoppers Online and Offline,” APPC report, June 2005, p. 29, downloaded at http://www.annenbergpublicpolicycenter.org. Source: http://online.wsj.com/mdc/public/page/2_3022-autosales .html#autosalesA, accessed September 21, 2014. 41% 2% 1% *When the numbers do not add up to 100%, it is because of a rounding error. Source: Joseph Turow, Lauren Feldman, and Kimberly Meltzer, “Open to Exploitation: American Shoppers Online and Offline,” APPC report, June 2005, p. 22, downloaded at http://www.annenbergpublicpolicycenter.org.
