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June 1st, 2005, 11:16 AM #1Study: Shoppers Naive About Online Prices
WASHINGTON - Most American consumers don't realize Internet merchants and even traditional retailers sometimes charge different prices to different customers for the same products, according to a new survey.
The study, "Open to Exploitation," found nearly two-thirds of adult Internet users believed incorrectly it was illegal to charge different people different prices, a practice retailers call "price customization." More than two-thirds of people surveyed also said they believed online travel sites are required by law to offer the lowest airline prices possible.
The study, expected to be released Wednesday by the Annenberg Public Policy Center of the University of Pennsylvania, is the latest to cast doubt on the notion of sophisticated consumers in the digital age.
It said 87 percent of people strongly objected to the practice of online stores charging people different prices for the same products based on information collected about their shopping habits.
"I don't think people understand this is being done," said Willi Stabenau, 23, a musician in New York who participated in the survey. "We don't let ourselves be tracked that way in any other facet of our lives. Why would you want that to happen while you're shopping?"
The Internet empowers careful shoppers to conveniently compare prices and features across thousands of stores. But it also enables businesses to quietly collect detailed records about a customer's behavior and preferences and set prices accordingly. Changing prices is generally lawful unless doing so discriminates against a consumer's race or gender or violates antitrust or price-fixing laws.
Stabenau said he shops online frequently but always remembers: "They're after your money, and you want to spend as little as possible."
"People are fooling themselves if they believe otherwise," Stabenau said.
Stores aggressively try to retain loyal customers who generate the highest sales while discouraging bargain-hunter shoppers who are less profitable because they check many sites for the same product at the lowest price. They are known within the industry as "bottom feeders" who don't show any brand or merchant loyalty.
First-time buyers at a retailer could see higher prices than a firm's repeat customers, and retailers may not offer discounts to consumers who buy the same brands regularly without even looking at alternative products on the same site.
"It's really murky because companies are so loathe to discuss this," said researcher Joseph Turow. "This is a new model of shopping reality. The question becomes, what do people feel is right? Can't more openness be the order of the day?"
The study urged government to require retailers to disclose exactly what information is collected about customers and how the data is used, and it urged schools to teach students better how to protect themselves as consumers.
Turow found a retail photography Web site charging different prices for the same digital cameras and related equipment depending on whether shoppers had previously visited popular price-comparison sites. He said grocery stores increasingly offer personalized discounts and coupons based on a person's shopping behavior.
Amazon.com outraged some customers in September 2000 after one buyer deleted the electronic tags on his computer that identified him as a regular customer and noticed the price of a DVD changed from $26.24 to $22.74. The company said it was the result of a random price test and offered to refund buyers who paid the higher prices.
The Annenberg study was based on results from a telephone survey from Feb. 8 to March 14 of 1,500 adults who said they had used the Internet within the past 30 days. The margin of sampling error was reported to be plus or minus 2.51 percentage points.
I know this goes on daily and I have worked with a company that sold the technology capable of serving results depending on targeting filters.
Any thoughts?Andy Rodriguez Consulting, Affiliate Program Management and Consulting Services, Since 2001
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June 1st, 2005, 11:27 AM #2
- Join Date
- January 18th, 2005
- St Clair Shores MI.
You can bet the retailers would love to up the price to cover coupons on affiliate enabled clicks. It should be illegal to raise a price to first time shoppers who don't have the merchants spyware web bug implanted in their butts. Discounts should be tied into a cart login with "user name & P/W.Webmaster's... Mike and Charlie
"What have you done today to put real value into a referral click...from a shoppers viewpoint!"
June 2nd, 2005, 03:02 AM #3
- Join Date
- April 7th, 2005
I am not in favor of price costumization; its very unfair for those who get items in higher prices even if they have more money...
Prices of items distributed and promoted online should follow strict price regulation.
June 2nd, 2005, 03:24 AM #4
Just playing devil's advocate here... How about airfare and hotels? Should everyone be required to pay the same price for that?
Different prices can work to the advantage of those who are savvy shoppers.
June 2nd, 2005, 03:40 AM #5
I have no problem with smart pricing algorythms, although I think retailers are shooting themselves in the foot when they raise prices on repeat customers (as per the Amazon example given above). I think loyalty programs are great - we all know it's much cheaper to keep a customer than to lasso a new one. How many of you have signed up for a kroger Card so you can get that discount price on coffee every other week? Same thing. If J&R Music World will give me a 2% discount for being a repeat customer, I'll gladly carry their cookie around with me so they can identify me.
I personally have never understood all this hoohaa about privacy, and especially cookies. I don't have anything to hide, so I don't care who sees where I go and who I see. Every time someone comes on strong about how proud they are to have learned to turn off cookies, I wonder just what kind of sites they are visiting that they are so afraid someone might find out? Makes me question that person's character more than their intelligence.
The only aspect of privacy that truly concerns me is identity theft, but measures to protect against that are significantly different than those surrounding shopping habits or even benign info in a forum profile somewhere. Identify theft is more a matter of always checking the little padlock in the status bar, of being careful what sites you share sensitive info like SS number, and being smart about the dangers of phising scams. And that's just the online part - any time someone takes a credit card imprint or even runs it through an electronic system that prints a double receipt, someone has as much or more info about you than they can get from any kind of cookie or traffic analysis program.Tom C.
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June 2nd, 2005, 09:08 AM #6Originally Posted by Andy Rodriguez
OK, I am a heretic. Sooooooo!Comments are opinion unless otherwise noted. Remember, pillage first. Then burn. Half of all people in the world have IQs under 100. You best learn to trust ol' SSanf!
June 2nd, 2005, 09:36 PM #7
Buy locally? What the heck kind of affiliate are you? Think how many less traffic jams there would be if everyone stayed home and shopped online.
June 3rd, 2005, 07:31 AM #8
- Join Date
- January 18th, 2005
Doesn't this go on in the offline world also? I can go clear across town and buy the same outfit for less, than in my own neighborhood mall or kroger store or whatever.
As far as cookies. Cookies are good, I eat them all the time. Doesn't mean everybody has to know I like Fig Newtons. Having something to hide has nothing to do with it.
June 3rd, 2005, 07:59 AM #9Originally Posted by SSanf
are too small.... then go to walmart to buy their new DVD player... insted of supporting the industry inwhich they work...
that's my2cents, 'cuz I'm a legend in my own mind....
June 3rd, 2005, 08:15 AM #10
I'm with Look4 on the privacy. I may not *advertise* whether I like Fig Newtons, but I'm not going to lose any sleep over the possibility of someone finding out, either. Plus, maybe I'll get a deal on 'em if some store knows I'd be interested!
A fool and their money are soon parted. Watch for sales at the brick and mortar stores and buy locally unless it is something you can't get any other way. ~Ssanf
OK, I am a heretic. Sooooooo!
Doesn't this go on in the offline world also? I can go clear across town and buy the same outfit for less, than in my own neighborhood mall or kroger store or whatever~JustRightThere is no knowledge that is not power. ~Hemingway
June 3rd, 2005, 09:42 AM #11
It's not talking about different merchants charging different prices, but a single merchant charging different prices to different customers.
This does happen fairly frequently offline, too. The travel industry is especially notorious. One person might pay $100 for an airline ticket and another person might pay $400.
Some other offline examples to think about: coupons mailed to customers, "loyalty cards", or places where you can negotiate prices (like car lots).
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