The impact of online searches on consideration set formation and consumer choice

Abstract

The Internet has been widely adopted for product information search. We have substantial understanding that the availability of the low-cost price information on the Internet can increase the consumerb s price sensitivity and drive down the market price. However, we lack the general view of how the use of the Internet, especially the search for non-price information, would affect consumer choice. Therefore, we extend the extant literature to investigate the impact of the online information search on consumer choice decision, especially the consideration set formation decision. We also examine the heterogeneity in the websites in terms of the types of information they deliver and how the difference would have distinct effects on the individual consideration and choice decision. The empirical evidences we find from the JD Power New Vehicle Shopping Survey data show that a) the use of the Internet to search for vehicle information leads to more diversified consideration set; c) the diversification of the consideration set due to the Internet use is because of the increase in considering unfamiliar vehicle categories and models; c) the Internet is not homogeneous in terms of its influence on the consideration decision.