Author's School

Olin Business School

Author's Department/Program

Business Administration

Language

English (en)

Date of Award

January 2010

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Chair and Committee

Tat Chan

Abstract

Essay One: Modeling Online Browsing and Purchase of Airline Tickets Online purchases are increasingly becoming a significant portion of total purchases in most product categories. While prior research in marketing has looked at information search and purchase decisions separately, we use a joint framework to study consumers' online browsing and purchase of airline tickets in a unique dataset of household-level dynamic click stream panel data. We use a three-stage model to study: i) the choice of the first website visited,: ii) the duration of browsing on travel websites before making a purchase: iii) the choice of the website where consumers will make the purchase, and how a later stage choice is affected by decisions in previous stages. We simultaneously estimate these three models which constitute a non-linear discrete-continuous equation system using a simulation-based econometric technique. We find significant effects of expected level of expenditure, prior browsing experience, prior purchase experience in determining consumer browsing and purchase behavior. We are able to quantify the differences in attractiveness of a website in getting consumers to first visit them and compare it with the conversion effectiveness of a website in terms of getting consumers who visit to make purchases. A significant impact of choice of the first site visited and browsing duration on choice of the purchase site indicates the importance of modeling these decisions simultaneously. Our results can help managers identify the major determinants of consumer browsing and online purchase behavior, some of which cannot be observed in a brick-and-mortar environment. Essay Two: Modeling Online Multi-category Purchase in Travel In this paper we investigate online purchase behavior at the basket level and model the multi-category purchases in the travel product category. While prior research in marketing has looked at browsing or individual category purchase decisions, we study consumers' online purchase of airline, car rental and hotel purchases together using a unique dataset of household-level dynamic click stream panel data. We use a two-stage model to study: i) the propensity of consumers to purchase a combination of products as a basket and: ii) the choice of the website where consumers will make those purchases. We then estimate the propensity of consumers to purchase a particular combination of products in their basket from different websites. This behavior constitutes a high dimensional system of multinomial equations which are then solved using a simulation-based econometric technique. We find significant effects of site preference, loyalty, prior browsing and demographic variables in determining consumer multi-category purchase behavior. Our results can help managers identify the major determinants of multi-category purchase as well as provide insights into cross promoting as well as upselling other products to consumers who visit their website.

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Permanent URL: http://dx.doi.org/10.7936/K71Z42FC

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