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Deal activation in online group buying
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posted on 02.02.2017, 03:27by Lim, Weng Marc
Online group buying is a new business model that has received little rigorous research attention. As a concept, it leverages the collective bargaining power of consumers to obtain a large volume of sales in return for discounted prices on goods and services over the Internet. With a view to creating original, meaningful, and useful knowledge, this study reviews prior research on online group buying behavior to identify extant gaps in understanding. From the review, the study contends that the behavioral view of online group buying behavior is not complete without an understanding of how buyer aggregation forms and is influenced. That is, buyer aggregation is required to activate an online group buying deal so that consumers can purchase products at a discount. A conceptual model to understand deal activation in online group buying is proposed. This model—based on the Theory of Goal-directed Behavior framed within marketing communications (i.e. word of mouth) and marketing-mix (i.e. marketing stimuli) settings—posits that consumers can choose whether to persuade other consumers to participate in the formation of buyer aggregation toward deal activation for an online group purchase. It postulates that consumers’ anticipated participation in buyer aggregation can be influenced by three marketing stimuli in online group buying: product classification (i.e. utilitarian/hedonic), message framing (i.e. rational/affective), and seller participation (i.e. conditioning of discounts). By means of an experimental approach in the form of a Solomon design and a sample consisting of students enrolled in undergraduate business units at an Australian university operating in Malaysia, the study shows that participants are more likely to recommend to a larger circle of people when faced with utilitarian products, affective messages, and active seller participation (i.e. provision of additional discounts on top of the general discount) than when faced with hedonic products, rational messages, and passive seller participation (i.e. provision of only a general discount). Theoretical and practical implications, limitations, and future research directions are also discussed. As a whole, the study advances understanding of consumer behavior in online group buying and thus should be useful to both academics and practitioners.