Wednesday, April 9, 2014

9:22 AM
3

Researchers examine the relationship between online searches and new product sales.


If you go online to browse for a cutting-edge product—whether it’s an item that’s just being introduced or one with new bells and whistles—are you more likely to buy it the more you browse?

Simon professor Paulo Albuquerque and two colleagues have been exploring questions about online consumer behavior like this for roughly four years. In their latest paper, “The Effects of Product Innovation on Online Search and Choice,” the authors examine publicly available Amazon.com data to see, among other things, how information on online product searches and purchases can be useful to managers interested in increasing their sales.

“This browsing data—how frequently a product is seen—and choice data—how much of the product is bought—help us say something about consumers: Are they curious or unsure about the product? And does that curiosity or uncertainty matter for the final choice they make?” Albuquerque says.

Only to a some extent, it turns out. As a rule, Web pages of products that are new or have novel characteristics tend to be heavily browsed. Frequent page visits are evidence of curiosity on the part of a consumer, but the data show that it doesn’t signal a browser’s final choice.

To reach this conclusion, the authors compared search and choice data for camcorders on Amazon. At the time of the study, manufacturers were beginning to introduce high-definition versions of the product. Camcorders with high definition appeared quite frequently in product searches, but more browsing didn’t translate into higher sales.

The study’s results have significant implications for product managers. “With new technology you expect the buzz,” Albuquerque says. “You might have the buzz, but consumers are still unsure if it will be useful, so they might be hesitant to buy. If the manager knows this—which is an outcome of our analysis—then to get the benefit of consumers browsing your product, you’ll have to minimize the negative.”

Managers can motivate purchases by using both the buzz and the uncertainty in positive ways. The study recommends tapping into people’s natural curiosity about new things.

“We find that consumers are more uncertain about newer and technically innovative products without necessarily liking them better, which leads to more search but not to more choice-given search,” the authors write.

Product managers should understand that consumers might want to see how the technology evolves before buying a product. Browsers may have questions about how it works with other media, or they might be waiting for the price to come down.

“Managers need to acknowledge that a new feature will get attention that leads consumers to go to the page,” Albuquerque notes. “It’s up to you to design the page to prevent any obstacles to buying it. One way is to add more testimonials of early adopters to the site—consumers who bought the product and have used the new feature with success. They will see it’s valuable for others, so that should help them decide.”

Educating potential buyers on a product that has no precedent also will help them click the “Buy” button. The introduction of Apple’s iPad is a good example, Albuquerque says, recalling an episode of the sitcom Modern Family that showed how the product is used in everyday life. Such product placement can go a long way to building understanding.

“You know consumers are going to talk about it, but you know there’s a lot of uncertainty: ‘How do I use it? Why should I use it?’ It’s building on the buzz, but it’s also making sure consumers understand why they should not worry that they’ll never use it,” Albuquerque says.

“If you expect that difference between the amount of browsing a consumer does on a product and the purchase decision he or she ultimately makes, you have to account for that when making decisions on manufacturing numbers, advertising, product placement, and website design.”

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