Information Technology and Search: A Model of Search set Formation Across Market Leaders and Market Followers

Competition in electronic markets raises a variety of new and important issues for IT managers. Among these issues is how a customer’s experience with web site design relates to customers’ purchase behavior. Firms have taken radically different approaches to web design, with varying levels of success. Some firms have used IT to recognize consumer preferences and increase loyalty, while others have encouraged price search comparisons by listing the products at shopbots. This research attempts to analyze the overall consumer’s experience with web design features. To do this, we analyze a unique dataset documenting, in the aggregate, the formation of search sets and the ultimate purchase decision. We find that there is a significant association between a consumer’s experience with poorly implemented web design features and larger consumer search sets. In addition, we find a significant association between consumers who experience poor ease of use when shopping online and consumer propensity to make a purchase, supporting the notion that consumer searching as well as a consumer’s experience with the design of a web site may be related to consumer purchasing behavior. Acknowledgements: The authors thank Michel Wedel, Peter Fader, Jeffrey Hu, Hong Yuan, and participants at the 2003 International Conference on Information Systems, the 2003 Americas Conference on Information Systems, seminar participants at the University of Michigan and Wayne State University for valuable comments on this research. Michael Smith gratefully acknowledges the support of the National Science Foundation through CAREER Award grant IIS0448516.