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Marketing Ph.D. Speaker Series: Ting Zhu

Friday, April 17, 2015
10:30am – 12:00pm

Storrs Campus
room 321,School of Business

Professor Ting Zhu will be visiting UConn on Friday, April 17, as part of the Marketing Department?s Ph.D. Speaker Series. Professor Ting Zhu will present "Can Price Matching Defeat Showrooming?"

Ting Zhu is an Associate Professor in Marketing at Sauder School of Business, University of British Columbia. She received her B.S. in Management Information Systems and M.S. in Business Administration from Tsinghua University and her Ph.D. in marketing from Carnegie Mellon University

Her research has been published in many top journals, including Rand Journal of Economics, Marketing Science, Journal of Marketing Research, Quantitative Marketing and Economics, and Marketing Letters

Abstract:

We study the impact of Best Buy's recent price-matching policy on the price competition between Best Buy and Amazon, and examine whether the policy can defeat consumers' showrooming behavior. We first empirically explore Best Buy's and Amazon's pricing patterns by using unique datasets collected from different sources. We find that both retailers reacted to the new policy; Best Buy and Amazon adjusted prices in the same directions. However, the directions vary across product categories. For products for which a consumer can obtain a large value from physical store experiences -- i.e., the ``showrooming" products -- we find that both Best Buy's and Amazon's prices went down. In addition, Amazon cut prices more aggressively than Best Buy. For ``non-showrooming'' products, or the products for which consumers benefit less from store experiences, we find the opposite patterns -- prices went up for both Best Buy and Amazon after the implementation of the policy.

We then develop an analytical model to explain the observed data patterns. Two retailers competing on a Hotelling line are assumed to focus on both profit maximization and beating competitors. Consumers who may or may not be aware of the price-matching policy optimally decide which store(s) to visit and where to make the purchase. We show that the effect of the price-matching policy depends on the additional value that consumers could obtain from visiting a physical store. Both retailers would raise prices when this value is small but would compete more aggressively on prices when this value is large, which is consistent with the data. We also show that for ``showrooming" products, both retailers' profits are lower as a result of the policy, but the online retailer's payoff may actually increase because of its success in beating its competitor.

Contact:

bin.li2@business.uconn.edu

Marketing Department (primary), School of Business, School of Business Ph.D. Program, UConn Master Calendar

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