Demand Growth in Services: A Discrete Choice Analysis of Customer Preferences and Online Selling
ABSTRACT The selling of perishable services (e.g., hotel rooms, airline seats, and rental cars) online is increasingly popular with both retailers and consumers. Among the innovative approaches to online sales is opaque selling. First popularized by Priceline.com's name‐your‐own‐price model, op...
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Published in | Decision sciences Vol. 47; no. 3; pp. 473 - 491 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Atlanta
Blackwell Publishing Ltd
01.06.2016
American Institute for Decision Sciences |
Subjects | |
Online Access | Get full text |
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Summary: | ABSTRACT
The selling of perishable services (e.g., hotel rooms, airline seats, and rental cars) online is increasingly popular with both retailers and consumers. Among the innovative approaches to online sales is opaque selling. First popularized by Priceline.com's name‐your‐own‐price model, opaque selling hides some attributes of the service (notably, brand and specific location) until after the purchase decision, in exchange for a discounted price. This means that a branded “product” is being sold as somewhat of a commodity, but the brand “name” is protected by the opaque model. The attraction of this model for retailers is that they are presumably able to increase their revenue stream, albeit at a lower rate, by selling rooms that otherwise would remain in inventory. In this article, we outline the development and analysis of an online choice survey to understand consumer preferences among three types of online distribution channels: regular full information sales channels, and opaque sales channels with or without consumer bidding. A Multinomial Logit model is employed to analyze the data and measure the consumer trade‐offs between price and other attributes of the product. We use the estimated model to calculate the incremental demand and revenue created by using an opaque channel simultaneously with regular full information channels. On balance, we find that correctly priced opaque channels can add to hotels revenue streams without undue cannibalization of regular room sales. |
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Bibliography: | ArticleID:DECI12177 Article is supported by National Natural Science Foundation of China Grant 71302079. istex:5BAEA00B12CF92BF8A3D3A5E9C6A39E81B8BC4DF ark:/67375/WNG-M8RLJWC6-R National Natural Science Foundation of China - No. 71302079 Corresponding author. ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23 |
ISSN: | 0011-7315 1540-5915 |
DOI: | 10.1111/deci.12177 |