Why Consumers Using Price Comparison Sites not Always Buy the Lowest Price Product

Why Consumers Using Price Comparison Sites not Always Buy the Lowest Price Product

The existence of price comparison sites has led to stronger competition between online sellers. This has mainly to do with the fact that online consumers become more price sensitive after having used a price comparison site, according to many studies (Degeratu, Rangaswamy, & Wu, 2001; Iyer
Pazgal, 2003).
So, the price of a product is an important variable that determines the value perceptions of a product. But there are still consumers that prefer to purchase products online from their favourite online suppliers or from large retailers, even though they are conscious of the higher prices for which they sell the products online.

Why and how do these non-price based purchases still occur?
Jung, Cho and Lee (2014) argue that there are two important variables that influence the price and value perceptions of consumers using price comparison sites. Those two variables can explain why consumers that use price comparison sites do not always purchase products with the lowest price:
1. Product type: the relative importance of price comparison sites differs among product types, because the importance of physical inspection differs across product types. In some cases it is extremely important to be able to physically inspect the product before using it, while in other cases it isn’t. The more important it is to physically inspect the product before using it, the relatively less effective price comparison sites will be.
2. Price consciousness: this is referred to as the extent to which consumers put importance to pay the lowest price. Thus, the higher the level of price consciousness, the more price sensitive the consumer will be. The fact that consumers sometimes do not pay a lot of attention to different prices on price comparison sites can thus also be explained by the fact that some consumers simply have a low level of price consciousness.

Sources:
Degeratu, A.M., Rangaswamy, A., & Wu, J. (2001) “Consumer Choice Behavior in Online and Traditional Supermarkets: The Effects of Brand Name, Price, and other Search Attributes”, International Journal of Research in Marketing Vol. 17 Iss.1 pp. 55–78.
Iyer, G., and Pazgal, A.I. (2003) “Internet Shopping Agents: Virtual Co-location and Competition”, Marketing Science, Vol. 22 Iss.1 pp. 85–106.
Jung,K. Cho, Y.C. and S. Lee (2014) “ Online Shoppers’ Response to Price Comparison Sites”, Journal of Business Research Vol. 67 pp. 2079-2087