Past Research

The Long-Term Effects of Price Promotions on Consumer Behavior: Evidence from a Field Experiment on Alibaba

Dennis J. Zhang1*, Hengchen Dai2*, Lingxiu Dong1 , Fangfang Qi3 , Nannan Zhang3 , Xiaofei Liu3 , Zhongyi Liu3 , Jiang Yang3 1. Olin Business School, Washington University in St. Louis 2. Anderson School of Management, University of California, Los Angeles 3. Alibaba Group Inc.

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Abstract: We study how promotions affect consumer behavior on an online retailing platform in the long term. We focus on a specific promotion: offering consumers coupons for products that have been in their shopping carts for more than one day. In a randomized field experiment involving more than 100 million customers with Alibaba Group—China’s largest e-commerce company—we randomly assigned half of eligible customers to a treatment condition where they might receive promotions for products in their shopping carts, while the other half of eligible customers did not receive coupons. We document unintended consequences of this promotion program during the month following our treatment period. On the positive side, our promotion program boosted consumer engagement, increasing the daily number of products customers viewed as well as customers’ daily purchase likelihood on the platform during the post-treatment period. On the negative side, we find that our promotion program intensified strategic consumer behaviors in two ways. First, receiving our promotions in the treatment period increased the proportion of products that consumers added to their shopping carts upon viewing them in the post-treatment period, possibly due to customers’ anticipation of promotions targeted at products in their shopping carts. Second, receiving our promotions in the treatment period lowered the prices customers paid for products in the post-treatment period. This effect holds for products that did not offer shopping-cart promotions, suggesting that prior use of shopping-cart promotions made people more price sensitive and trained them to search for other promotion mechanisms beyond shopping-cart-specific promotions. Importantly, both the positive and negative long-term effects spilled over to sellers on the same retailing platform that did not previously offer promotions to consumers. Our findings suggest that price promotions may change expectations and reference points, which can further produce both a positive long-term effect on consumer engagement and a negative long-term effect on strategic behavior. We discuss the practical implications of our findings for platforms and retailers.

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The Value of Pop-up Stores in Driving Online Engagement in Platform Retailing: Evidence from a Large-Scale Field Experiment with Alibaba

Dennis J. Zhang1*, Hengchen Dai2*, Lingxiu Dong1 , Qian Wu3 , Lifan Guo3 and Xiaofei Liu3 1. Olin Business School, Washington University in St. Louis 2. Anderson School of Business, University of California at Los Angeles 3. Alibaba Group Inc.

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Abstract: We study the value of short-lived and experiential-oriented pop-up stores, a popular type of omnichannel retail strategy, on both retailers that participate in pop-up store events and retailing platforms that host these retailers. We conduct a large-scale, randomized field experiment with Alibaba Group involving approximately 800,000 customers. We randomly assign consumers to either receive a message about an upcoming weeklong pop-up store event organized by Alibaba’s business-to-consumer platform (Tmall.com) or not receive any message about the event. We find that our message increased foot traffic to the pop-up store and in turn boosted expenditure at participating retailers’ online stores at Tmall after the event ended. Furthermore, we use advanced Wi-Fi technology to track customers’ visits to the pop-up store—a missing component from past research that commonly relies on point-of-sales data. We find that pop-up store visits substantially increased customers’ subsequent expenditure at participating retailers’ Tmall stores. In addition, from a platform perspective, we show that pop-up store visits increased customers’ purchases at retailers that sell related products on Tmall but did not participate in the pop-up store event. Additional analyses shed light on possible mechanisms underlying the cross-channel and spillover effects of pop-up stores and demonstrate that these effects were concentrated on prospective consumers.

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A Theory of Goal Maintenance: A Distinct and Vivid Pre-Goal Self Predicts Post-Goal Maintenance Motivation

Author(s): John, Elicia, Advisor(s): Hershfield, Hal E, Shu, Suzanne B.

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Abstract: I develop and test a theory of goal maintenance that posits that individuals who achieve a life-changing goal — such as getting out of debt, becoming sober or losing a substantial amount of weight — are more likely to maintain the progress achieved during goal pursuit if they psychologically distance themselves from the pre-goal self and routinely engage in activities that activate memories of the past, less-flattering self. This theory of goal maintenance builds on prior research in identity appraisal (Wilson & Ross, 2001), vividness and intertemporal choice (Hershfield et al., 2011), and self-discrepancy (Higgins, 1987) as it relates intertemporal discrepancies in self-state representation to motivation and behavior. I applied this theory of goal maintenance to weight-loss maintenance. Through a series of six studies, I provide evidence that goal maintenance is a distinct psychological phenomenon from goal pursuit along the dimensions of past self-salience and psychological distance; and I also show that activating memories of a past, overweight self and feeling more psychologically distant from this self lead to implicit goal maintenance behavior, such as a higher willingness to pay for healthy versus unhealthy items and greater interest in learning about healthy behaviors and topics. Additionally, I provide evidence across studies that past self-salience is more associated with a prevention regulatory focus (i.e., preventing unhealthy behaviors), whereas psychological distance is more associated with a promotion regulatory focus (i.e., promoting healthy behaviors). Further, a longitudinal study of a small sample of individuals examined whether the positive effects of salience and psychological distance on weight-maintenance behaviors may persist over time and outside of a laboratory environment.

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