Several two-stage choice models (consideration stage plus choice stage) have been proposed in the marketing literature. We extend this literature by developing a more general model that incorporates how consumer search influences the degree to which they consider various brands. To test the validity and value of our model, we operationalized it with data obtained from Peapod, an online grocer, where we tracked consumers' search processes. We demonstrate that our model performs better than competing models on all the key criteria. New choice models, such as the ones proposed here, are necessary for deriving managerially relevant understanding of choice behavior in online markets. Our empirical results suggest that consumers search both their internal memory and external information at the store to determine the degree to which they consider various brands. Consumers are also heterogeneous with respect to their capability to process external information. For some consumers, external information search dramatically increases the degree to which they consider various brands; but, for others, it has little impact on their consideration. We also find that certain features (e.g., personal lists) reduce consideration set sizes, whereas other features (e.g., sort) increase consideration set sizes.
All Science Journal Classification (ASJC) codes
- Business and International Management