MEASURING INDIVIDUAL SEARCH COSTS ON THE MOBILE INTERNET

Abstract

The advent of smartphones enables more and more consumers to use the mobile internet. In addition, there is a continuing integration of location-based services (LBS). By means of Global Positioning Systems or WiFi-triangulation LBS provide context-aware information to consumers. This leads to a convergence of online and offline worlds. The usage of LBS delivers additional information to consumers (e.g., alternative offers or detailed product information). Particularly during the search process, information about prices or geographic distances, that are relevant for the purchase, are of importance. The goal of this study is to estimate search costs in a mobile internet context. We first illustrate the relevant literature on search theory (online/offline, mobile/desktop) and consumer behavior. Then we estimate search costs via a choice-based conjoint analysis for a large representative online sample. Our empirical results show that mobile search and LBS have a significant impact on consumer behavior. We quantify search costs in monetary units on an individual level by using geographic distance as a trade-off for price. We find that consumers trade off one extra minute of travel to another store with an average price reduction of 0.87.

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