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Investigating Consumer Purchase Behavior in Related Technology Product Categories

Author

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  • S. Sriram

    () (Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109)

  • Pradeep K. Chintagunta

    () (Booth School of Business, University of Chicago, Chicago, Illinois 60637)

  • Manoj K. Agarwal

    () (School of Management, Binghamton University, State University of New York, Binghamton, New York 13902)

Abstract

We present a framework of durable goods purchasing behavior in related technology product categories that incorporates the following aspects unique to technology product purchases. First, it accounts for consumers' anticipation of declining prices (or increasing quality) over time. Second, the durable nature of technology products implies that even if two categories are related as complements, consumers may stagger their purchases over several periods. Third, the forward-looking consumer decision process, as well as the durable nature of technology products, implies that a consumer's purchase in one category will depend on the anticipated price and quality trajectories of all categories. As a potential aid to future researchers, we also lay out the data requirements for empirically estimating the parameters of our model and the consequences of not having various elements of these data on our ability to estimate the parameters. The data available for our empirical analysis are household-level information on -level first-time decisions in three categories—personal computers, digital cameras, and printers. Our results reveal a strong complementary relationship between the three categories. Policy simulations based on a temporary price decrease in any one category provide interesting insights into how consumers would modify their adoption behavior over time and also across categories as a consequence of the price decrease.

Suggested Citation

  • S. Sriram & Pradeep K. Chintagunta & Manoj K. Agarwal, 2010. "Investigating Consumer Purchase Behavior in Related Technology Product Categories," Marketing Science, INFORMS, vol. 29(2), pages 291-314, 03-04.
  • Handle: RePEc:inm:ormksc:v:29:y:2010:i:2:p:291-314
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    File URL: http://dx.doi.org/10.1287/mksc.1090.0506
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Yuanchun Jiang & Jennifer Shang & Chris F. Kemerer & Yezheng Liu, 2011. "Optimizing E-tailer Profits and Customer Savings: Pricing Multistage Customized Online Bundles," Marketing Science, INFORMS, vol. 30(4), pages 737-752, July.
    2. Fanjuan Shi & Jean-Luc Marini, 2014. "Do we need to believe Data/Tangible or Emotional/Intuition?," Post-Print halshs-01065283, HAL.
    3. Gal Oestreicher-Singer & Arun Sundararajan, 2012. "The Visible Hand? Demand Effects of Recommendation Networks in Electronic Markets," Management Science, INFORMS, vol. 58(11), pages 1963-1981, November.
    4. Pradeep K. Chintagunta & Harikesh S. Nair, 2011. "Structural Workshop Paper --Discrete-Choice Models of Consumer Demand in Marketing," Marketing Science, INFORMS, vol. 30(6), pages 977-996, November.
    5. Steve Berry & Ahmed Khwaja & Vineet Kumar & Andres Musalem & Kenneth Wilbur & Greg Allenby & Bharat Anand & Pradeep Chintagunta & W. Hanemann & Przemek Jeziorski & Angelo Mele, 2014. "Structural models of complementary choices," Marketing Letters, Springer, vol. 25(3), pages 245-256, September.
    6. repec:eee:ijrema:v:32:y:2015:i:1:p:78-93 is not listed on IDEAS
    7. repec:tiu:tiutis:52e91e47-4a2d-4e7b-bb23-3926b842ae30 is not listed on IDEAS
    8. Reinhardt, Ronny & Gurtner, Sebastian, 2015. "Differences between early adopters of disruptive and sustaining innovations," Journal of Business Research, Elsevier, vol. 68(1), pages 137-145.
    9. repec:eee:joreco:v:19:y:2012:i:1:p:67-77 is not listed on IDEAS
    10. Galassi, Veronica & Madlener, Reinhard, 2014. "Identifying Business Models for Photovoltaic Systems with Storage in the Italian Market: A Discrete Choice Experiment," FCN Working Papers 19/2014, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    11. Jiang, Yuanchun & Shang, Jennifer & Liu, Yezheng & May, Jerrold, 2015. "Redesigning promotion strategy for e-commerce competitiveness through pricing and recommendation," International Journal of Production Economics, Elsevier, vol. 167(C), pages 257-270.
    12. Maxim Sinitsyn, 2012. "Coordination of Price Promotions in Complementary Categories," Management Science, INFORMS, vol. 58(11), pages 2076-2094, November.
    13. Hongju Liu & Pradeep K. Chintagunta & Ting Zhu, 2010. "Complementarities and the Demand for Home Broadband Internet Services," Marketing Science, INFORMS, vol. 29(4), pages 701-720, 07-08.
    14. repec:eee:ijrema:v:28:y:2011:i:2:p:134-144 is not listed on IDEAS
    15. repec:eee:tefoso:v:132:y:2018:i:c:p:268-283 is not listed on IDEAS
    16. repec:eee:jouret:v:88:y:2012:i:1:p:47-62 is not listed on IDEAS
    17. V. Kumar & S. Sriram & Anita Luo & Pradeep K. Chintagunta, 2011. "Assessing the Effect of Marketing Investments in a Business Marketing Context," Marketing Science, INFORMS, vol. 30(5), pages 924-940, September.
    18. Pinar Karaca-Mandic, 2011. "Role of complementarities in technology adoption: The case of DVD players," Quantitative Marketing and Economics (QME), Springer, vol. 9(2), pages 179-210, June.

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