Study Procedure
Our objective is to observe how the relative SLRs of the
retailers affect their pricing strategies. To form an empirical
proxy of the SLR, we need indicators of retailer-specific
loyal and switcher segment sizes. We conduct two studies.
The first is an exploratory study using readily available
descriptive statistics for the retailers. The advantage of this
approach is that data for all 14 retailers can be obtained, and
the disadvantage is that aggregate retailer descriptive may
inadequately proxy the SLR. The second study uses a large
Internet panel database that tracks all Internet site visits and
purchases for 100,000 panel members. This study’s advantage
is the rich set of micro level data to form switcher and
loyalty measures. However, the database contains information
on a more limited set of Internet booksellers. Given the
advantages and disadvantages of each study, we present
both as independent tests of our model predictions