When do customers choose an
everyday low pricing store
Why is a grocery's pricing strategy important?
Contributions to the literature
1. Pricing strategy on customers' store choice.
2. Price perception and price knowledge.
3. Type of shopper, price sensitivity and promotion sensitivity.
4. Location, basket price and basket size.
Research question
What is the effect of a grocery's pricing
strategy, location and basket price on
customers' store choice?
Sub questions
Data collection
Questionnaire with a conjoint analysis and statements.
The questionnaire statements are based on existing scales
and measured on a 7 point Likert scale.
Questionnaire is distributed in three weeks.
Respondents were invited by email.
Total sample of 178 respondents.
Sample is representative.
Attribute Alternative 1 Alternative 2 Alternative 3 Supermarket Jumbo Deen Albert Heijn
Method
Conjoint analysis with Latent Gold.
T-test.
Conditional logistic regression with
STATA.
Results
Hypotheses testing main model (with main attributes of
the conjoint analysis):
Hypothesis 1 partially supported PROMO store has a
positive effect on customers' store choice.
Hypothesis 2 supported Customers prefer the store
that is located the closest to the customer's home location.
Results
Hypotheses testing full model (with moderator effects included in the main model):
Hypotheses 3 supported Large basket size shoppers are willing to travel more to a store that is located further from a customer’s home
location, compared to small basket size shoppers.
Hypotheses 5 supported If customers' price perception of a specific store become more unfavorable, they are less likely to choose that store.
Hypotheses 6, 7, 9 and 10 not supported.
Managerial implications
1. Take into account which customers prefer a
PROMO strategy.
2. Target less price sensitive customers.
3. Do business online, but also create a shop
experience (memorable event) at the traditional
brick and mortar stores.
4. Loyalty program.
Limitations and further research
1. Gender not asked.
2. Pricing strategy effect or brand effect?
3. Loyalty effects?
4. Utilitarian shopper type consists of one
item only.
Latent Class
When accounting for 3 segments in both
small and large basket size datasets the
model fit increases.
Model with 1 segment Model with 3 segments
