Consumer Search and Purchase: An Empirical Investigation of Retargeting Based on Consumer Online Behaviors

49 Pages Posted: 12 Jan 2017 Last revised: 21 Feb 2019

See all articles by Zhenling Jiang

Zhenling Jiang

Georgia State University - Department of Marketing

Tat Chan

Washington University in St. Louis - John M. Olin Business School

Hai Che

Indiana University - Kelley School of Business

Youwei Wang

Fudan University - School of Management

Date Written: January 31, 2018

Abstract

This paper empirically investigates how marketers can retarget consumers who have searched online but did not purchase, based on their search behaviors. To infer the relationship between search activities and preferences of retargeted consumers, we estimate a structural search model from data. Based on the estimation results, we then use a series of counterfactuals to explore how to improve the effectiveness of retargeting. Results show a substantial heterogeneity in responses to retargeting among consumers who exhibited different search behaviors. In contrast, the heterogeneity among consumers based on other characteristics (e.g. age, gender etc.) is moderate. We consider two counterfactual marketing strategies. The first is to send out coupons redeemed upon purchasing, and the second is to send seller recommendations that will reveal the actual offering of recommended sellers. We find that, while both strategies help increase the conversion rate, seller recommendations are more effective than coupons, suggesting the importance of providing consumers the seller information for retargeting. We also show that a pricing mechanism such as auctions making sellers self-select to participate will improve the effectiveness of retargeting. Finally, online retail platforms should provide participating sellers the information on consumers’ search behaviors. Such information will benefit not only the sellers but also consumers.

Keywords: consumer retargeting, consumer search, sequential search, online shopping

JEL Classification: C50, D03, M31

Suggested Citation

Jiang, Zhenling and Chan, Tat and Che, Hai and Wang, Youwei, Consumer Search and Purchase: An Empirical Investigation of Retargeting Based on Consumer Online Behaviors (January 31, 2018). Kelley School of Business Research Paper No. 17-5. Available at SSRN: https://ssrn.com/abstract=2897289 or http://dx.doi.org/10.2139/ssrn.2897289

Zhenling Jiang (Contact Author)

Georgia State University - Department of Marketing ( email )

United States

Tat Chan

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Hai Che

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

Youwei Wang

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

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