Consumers' SKU choices in an online supermarket : a latent class approach

Geng CUI, Yanan WANG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

4 Citations (Scopus)

Abstract

This study examines the effects of loyalty and e-marketing mix variables on the choices of online consumers at the stock-keeping-unit (SKU) level. Using a panel dataset from an online supermarket, we estimate a discrete choice model of a frequently purchased product; generate the refined smoothing constants of the loyalty variables for brand, size, and SKU; and adopt the latent class approach to address consumer heterogeneity. The findings suggest that SKU loyalty is a better predictor of consumer choices than brand and size loyalty. Although online consumers are not sensitive to the net prices of SKU alternatives, they are attracted to price promotions. While webpage display has little effect on SKU choices, speedy delivery has a positive impact. The latent class approach significantly improves model fitness and classification accuracy. Analysing consumer choices at the SKU level can help online supermarkets with promotion planning and inventory and distribution management to improve customer satisfaction and profitability.
Original languageEnglish
Pages (from-to)495-514
Number of pages20
JournalJournal of Marketing Management
Volume26
Issue number5/6
DOIs
Publication statusPublished - 1 May 2010

Fingerprint

Supermarkets
Latent class
Loyalty
Consumer choice
Price promotions
Discrete choice models
Smoothing
Customer profitability
Planning
Consumer heterogeneity
E-marketing
Marketing mix
Predictors
Customer satisfaction
Fitness
Distribution and inventory management

Keywords

  • Internet retailing
  • consumer loyalty
  • discrete choice model
  • online supermarket
  • stock keeping unit (SKU)

Cite this

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Consumers' SKU choices in an online supermarket : a latent class approach. / CUI, Geng; WANG, Yanan.

In: Journal of Marketing Management, Vol. 26, No. 5/6, 01.05.2010, p. 495-514.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AU - WANG, Yanan

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AB - This study examines the effects of loyalty and e-marketing mix variables on the choices of online consumers at the stock-keeping-unit (SKU) level. Using a panel dataset from an online supermarket, we estimate a discrete choice model of a frequently purchased product; generate the refined smoothing constants of the loyalty variables for brand, size, and SKU; and adopt the latent class approach to address consumer heterogeneity. The findings suggest that SKU loyalty is a better predictor of consumer choices than brand and size loyalty. Although online consumers are not sensitive to the net prices of SKU alternatives, they are attracted to price promotions. While webpage display has little effect on SKU choices, speedy delivery has a positive impact. The latent class approach significantly improves model fitness and classification accuracy. Analysing consumer choices at the SKU level can help online supermarkets with promotion planning and inventory and distribution management to improve customer satisfaction and profitability.

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