Sloan Center for Internet Retailing - University of California, Riverside

The Sloan Center for Internet Retailing, located at the University of California, Riverside, is the world's leading university research center dedicated to improving the effectiveness of online retailing.

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Below are the most recent posts of the Sloan Center blog. We invite you to browse.

Zettelmeyer, Florian, Fiona  Scott Morton, and Jorge Silva-Risso, "How the Internet Lowers Prices: Evidence from Matched Survey and Auto Transaction Data," (2005).

Abstract.  While research has shown that the Internet has lowered the prices in some established industries, we know little about how using the Internet lowers prices.  We answer this question for the auto retailing industry with matched survey and transaction data on 1,500 car purchases in California. We show that the Internet lowers prices for two distinct reasons. First, the Internet informs consumers about the invoice price of dealers. Second, the referral process of online buying services helps consumers obtain lower prices. The combined information and referral price effects are -1.5%, or 22% of dealers’ average gross vehicle profit. We also find that the benefits of gathering information differ by consumer type. Buyers who have a high disutility of bargaining but who have collected information on the specific car they eventually purchase pay 1.5% less than they otherwise would. In contrast, buyers who like the bargaining process do not benefit from such information.  Download pdf.

Hoffman, Donna L., Thomas P. Novak, and Alladi Venkataesh, "Has The Internet  Become Indispensable? Empirical Findings and Model Development," (April  2004).

Abstract.  We seem to be in the midst of an Internet revolution and entering the  age of digital connectivity. The pace of social change resulting from the diffusion  of this technology, both nationally and globally is, by many accounts, dramatic.  In less than ten years, the Internet has become indispensable to many people in  their daily lives. What are the consequences of this? In this paper, we introduce  the idea that the Internet is becoming increasingly essential to families and the  society at large, present some data to support our contentions and develop a  conceptual model that allows for the testing of key hypotheses related to Internet  indispensability as next steps.

In this paper we explore the idea that the Internet has become indispensable to people in their daily lives, and develop a conceptual model that allows us to address the research questions this idea raises. The idea is that the Internet has become so embedded into the daily fabric of people’s lives that they simply cannot live with out it. How is the Internet indispensable and in what ways? For  which groups of people is it indispensable, for what tasks, and how has this  changed their lives and our society as a whole?

We take on these questions as follows. First, we provide some data from two  national studies of American households that support our contention that the  Internet has become indispensable on several key dimensions. Next, we  summarize broader discussions of indispensability drawn from the literature.  Then, we present our conceptual model and suggest research directions for the  future. We conclude with several comments on the social and policy implications  that arise from the fact that increasing numbers of individuals would be unwilling  to give up their access to the Internet if asked, as they have come to consider it  indispensable.  Download pdf.

Hoffman, Donna L., Praveen K. Kopalle, Thomas P. Novak, and David Porter, "Identifying and Using Emergent Consumers in Developing Radical Innovations," (March 2004).

A full proposal submitted to the MSI Collaborative Research Competition: JMR Special Issue, Practitioner–Academic Collaborative Research.  Download pdf.

Hoffman, Donna L. and Thomas P. Novak, "A Conceptual Framework for Considering Web-Based Business Models and Potential Revenue Streams," (December 2003).

Abstract.  In the wake of the dot-com collapse, many are now asking what it takes to be a success online and what makes for a profitable Web business. Understanding the issues involved in achieving profitability on the Web is turning out to be elusive, even as the Internet becomes an increasingly potent economic force both domestically and globally.

We introduce a descriptive framework for understanding the creation of successful Web-based business models that takes advantage of the distinctive features of the Internet in unique and sustainable ways. We discuss how managers can analyze different business models that combine the value proposition for both customers and the firm and show how our business model integration framework is a powerful organizing method not only to understand where the firm is at the present time, but also to help develop strategies for the future. These and other ideas are designed to help firms, dotcom
and multi-channel alike, evaluate their evolving digital commerce business strategies.  Download pdf.

Hoffman, Donna L., "The Consumer Experience:  A Research Agenda Going Forward," (May 2003).

Presentation given at the FTC Public Workshop 1, "Technologies for Protecting Personal Information:  The Consumer Experience," May 14, 2003.  Download pdf of Powerpoint Slides.

Chatterjee, Patrali, Donna L. Hoffman, and Thomas P. Novak, "Modeling the Clickstream: Implications for Web-Based Advertising Efforts," (December 2002).

Abstract.  In this paper, we develop an analytical approach to modeling consumer response to banner ad exposures at a sponsored content Web site that reveals significant heterogeneity in (unobservable) click proneness across consumers. The effect of repeated exposures to banner ads is negative and nonlinear, and the differential effect of each successive ad exposure is initially negative, though non-linear, and levels off at higher levels of passive ad exposures. Further, significant correlations between session and consumer click proneness and banner exposure sensitivity suggest gains from repeated banner exposures when consumers are less click prone. For a particular number of sessions, more clicks are generated from consumers who revisit over a longer period of time, than for those with the same number of sessions in a relatively shorter time frame. We also find that consumers are equally likely to click on banner ads placed early or late in navigation path and that exposures have a positive cumulative effect in inducing clickthrough in future sessions. Our results have implications for online advertising response measurement, dynamic ad placement, and may help guide advertising media placement decisions.  Download pdf.

See also:  earlier May 1998 working paper.

Hoffman, Donna L., Thomas P. Novak, and Ann Schlosser, "Locus of Control, Web Use, and Consumer Attitudes Toward Internet Regulation," (May 2002).

Abstract.  We empirically examine how locus of control, an important consumer behavior construct, differentiates among individuals’ Web use in a marketing policy context. We argue that consumers’ general expectancies as to whether or not they or others control events can predict their Web use and their beliefs regarding the regulation of content on the Internet. We test a series of s concerning locus of control and consumer behavior on the Internet among consumers classified as Internals or Externals using data collected in conjunction with the 10th WWW User Survey. We assess scale measurement properties using single factor confirmatory factor analysis models, and test hypotheses using a correlational and structural equation modeling framework.

Our results suggest that the more consumers believe they control their own destinies, the more they use the Web in a goal-directed manner, as a supplement to other activities. Furthermore, such consumers prefer to retain control of the online environment through self- rather than government regulation. On the other hand, the more consumers believe that external factors control events, the more they use the Web experientially, to substitute for other activities such as print media consumption and spending time with friends and family. In addition, such consumers’ general expectancies regarding the sources of external control – either powerful others or chance – influence their Internet policy beliefs. The more consumers believe that powerful others are in control, the more they prefer government regulation. Those who believe that outcomes are due to chance have no clear preferences regarding regulation of the Internet. These effects persist above and beyond what can be explained by Internet use demographics and individual characteristics. 

Our findings demonstrate that consumers' general expectancies as to whether they or others control events can predict their Web behavior and Internet policy beliefs and that locus of control is a highly relevant construct in understanding consumer behavior on the Internet.  Download pdf.

Hoffman, Donna L., Peter G.M. van der Heijden, and Thomas P. Novak, "Mapping Asymmetry in Categorical Consumer Choice Data," (December 2001).

Abstract.  Marketers are often interested in graphically depicting the patterns of consumer choice behavior. In such situations, square asymmetric frequency data arise commonly. We show how to graphically model components of asymmetry in these categorical data applications. Our approach considers asymmetry in terms of its component departures from the overall or total structure in the asymmetric frequency matrix.
Two residual maps are developed which represent distinct sources of asymmetry in brand choice: share driven asymmetry and share-adjusted asymmetry. Thus, the maps show deviations from symmetry due to changes in market shares and consumer heterogeneity. We formulate the problem in the context of loglinear modeling and the singular value decomposition (SVD) of residual matrices. The components of asymmetric structure (residuals from the models) are decomposed via the SVD and represented graphically in a low-dimensional space. We illustrate the method, easily implementable using standard statistical packages, with two examples of automobile choice. One is the well known 16-by-16 car trade-in problem from Harshman, Green, Wind, and Lundy (1982), and the other is a more recent example drawn from the Colombo, Ehrenberg and Sabavala (1994) "car challenge."  Download pdf.

Novak, Thomas P., Donna L. Hoffman, and Adam Duhachek, "The Influence of Goal-Directed and Experiential Actitivies on Online Flow Experiences," (December 2001).

Abstract.  Recently, it has been proposed that creating compelling experiences in the distinctive consumption environment defined by the Internet depends on facilitating a state of flow. While it has been established that consumers do, in fact, experience flow while using the Web, consumer researchers do not as yet have a comprehensive understanding of the specific activities during which consumers actually have these experiences.

One fruitful focus of research on online consumer experience has been on two distinct categories of consumption behavior – goal directed and experiential consumption behavior. Drawing distinctions between these behaviors for the Web may be particularly important because the experiential process is, for many individuals, as or even more important than the final instrumental result. However, the general and broad nature of flow measurement to date has precluded a precise investigation of flow during goal-directed versus experiential activities.

In this paper, we explore this issue, investigating whether flow occurs during both experiential and goal-directed activities, if experiential and goal-directed flow states differ in terms of underlying constructs, and what the key characteristics are – based upon prior theory – that define “types” of flow experiences reported on the Web. Our approach is to perform a series of quantitative analyses of qualitative descriptions of flow experiences provided by Web users collected in conjunction with the 10th GVU WWW User Survey. In contrast with previous research that suggests that flow would be more likely to occur during recreational activities than task-oriented activities, we found more evidence of flow for task-oriented rather than experiential activities, although there is evidence flow occurs under both scenarios. As a final note, we argue that the role that goal-directed and experiential activities may play in facilitating the creation of compelling online environments may also be important in a broader consumer policy context.  Download pdf.

Hoffman, Donna L., "SEC Portals Roundtable.  Internet Advertising:  From CPMs to Results," (May 2001).

Presenation at the United States Securities and Exchange Commission.  Portals Roundtable:  Relationship Between Broker-Dealers and Web Sites, May 23, 2001.  Download Powerpoint presentation.