Journal of Interactive Marketing 25 (2011) 95 – 109

www.elsevier.com/locate/intmar

Do Price Charts Provided by Online Shopbots Influence Price Expectations

and Purchase Timing Decisions?
Wenzel Drechsler ⁎ & Martin Natter
Strothoff Chair of Retailing, University Frankfurt, Germany

Available online 22 March 2011

Abstract

Online price comparison sites (shopbots) like PriceGrabber.com are the most powerful tools for consumers to easily compare prices and find offers
for desired products. Besides providing distributions of actual prices in price comparison tables, shopbots like NexTag.com have recently introduced
price charts (line charts) displaying a product's full price history. Price charts should support consumers in forming expectations about future prices.
Nevertheless, it is currently unclear how price charts influence consumer price expectations and purchase decisions. The results of this study show that
the provision of past prices leads to strong adjustments of price expectations depending on price chart characteristics. In particular, the trend, variance and
range of past prices in the chart strongly affect price expectations and purchase timing decisions. Furthermore, in the case of a strong downward trend and
high variance in past prices, results show that nearly 50% of the total effect is caused by the visualization of the price history.
© 2011 Direct Marketing Educational Foundation, Inc. Published by Elsevier Inc. All rights reserved.

Keywords: Price expectations; Purchase timing; Shopbots; Price comparison sites; Information visualization

Introduction while on pricescan.com, it is called “price trend graph.” Most

Nielsen NetRatings (2007) shows that the ability to
efficiently compare offers is one of the most popular reasons
for consumers to shop on the Internet, as it is cited by 62% of
those surveyed. Thus, online price comparison sites (shopbots)
like PriceGrabber.com and YahooShopping.com are the most
powerful tools for consumers to easily compare prices and find
offers for desired products. As such, shopbots reduce the cost of
search for information about products and facilitate better and
more efficient purchase decisions (e.g., Häubl and Trifts 2000;
Trifts and Häubl 2003).
Besides providing distributions of actual prices for any
product in the form of price comparison tables, shopbots like
NexTag.com, PriceScan.com, and Skinflint.co.uk have recently
introduced line charts displaying a product's full price history.
NexTag.com, for instance, calls this feature “price history,”
⁎ Corresponding author at: Strothoff Chair of Retailing, Goethe University
Frankfurt, Department of Marketing. Grueneburgplatz 1, 60323 Frankfurt,
Germany.
E-mail addresses: wenzel.drechsler@wiwi.uni-frankfurt (W. Drechsler),
natter@wiwi.uni-frankfurt.de (M. Natter).
1094-9968/$ - see front matter © 2011 Direct Marketing Educational Foundation, Inc. Published by Elsevier Inc. All rights reserved.
doi:10.1016/j.intmar.2011.02.001
frequently, such charts show the minimum prices for a product
across different retailers over time (see Fig. 1).
Information on a product's price history is a source of
external reference prices and should therefore stimulate
consumer behavior (Kopalle and Lindsey-Mullikin 2003).
Consequently, price charts should support consumers when
forming expectations about future prices. Research shows that
price expectations and purchase timing are conceptually related
(Danziger and Segev 2006). Price history information included
in the price chart could therefore enforce strategic buying
behavior with respect to buying now or later. Since studies in
behavioral finance show that some investors base their buy or
sell decisions depending on certain chart patterns of past stock
prices (Park and Irwin 2007), one might also expect that
visualization itself has an effect on consumer expectations and
purchase timing decisions. Depending on price charts char-
acteristics and, therefore, price history, consumers potentially
form and/or adjust expectations about future prices, which in
turn influence purchase timing decisions.
Information on the most attractive product categories on
shopbot sites reveals that consumers use shopbots especially for
finding the best offers in the category of consumer durables,
96 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
Fig. 1. Examples of shopbots with price charts.
particularly consumer electronics such as notebooks, TVs or
digicams. This is because purchase timing is a critical decision,
especially for the most durable product purchases (Mazumdar,
Raj, and Sinha 2005). Hence, consumers who use shopbot sites
that provide information about a product's price history can
gain easy access to information about a product's life cycle
stage. Although consumers expect prices to decrease over a
product's life cycle especially in high-tech markets (Bridges,
Yim, and Briesch 1995), the price chart makes this information
more apparent to consumers.
Understanding the response of consumers to price chart
information should be relevant for shopbots, retailers and
manufacturers. When price charts are perceived as relevant
information, shopbots could increase their popularity. Research
shows that with respect to purchase timing, a change in price
expectations has a strong influence on demand elasticities (Erdem
et al. 2005). Hence, retailer and manufacturer sales and profits are
potentially affected by consumer reactions to price charts.
To the best of our knowledge, there is no study that analyzes
the effect of price history charts on consumer decision-making.
The introduction of a product's full price history visualized in
a line chart introduces two types of information, namely,
1) historical information about prices and 2) a graphical display
of this information; as such, it is currently unclear how price charts
influence consumer expectations and purchase decisions.
Based on the foregoing discussion, it is the aim of this study
to explore the effects of price charts on consumer expectations
regarding durables prices and purchase timing decisions. In
particular, this study investigates whether the introduction of
price charts (that is, price history) induces reference price effects
in terms of adjusting a consumer's price expectation. Further-
more, this study analyzes the impact of price chart character-
istics on consumer price expectations and purchase timing and
disentangles the effects of reference price histories from effects
due to their visualization.
This study contributes to several fields of research. First, with
regard to reference price research, this study extends the analysis
of the impact of external reference prices at a certain point in time
to an analysis of a whole series of external reference prices over
time that are captured and ordered in a single source. Second, the
study enhances knowledge about reference price effects on
durable goods purchase timing (Mazumdar, Raj, and Sinha 2005).
Third, the results of this study update current knowledge
concerning the relation between the presentation of information
at shopbot sites and consumer price perceptions (Smith 2002).
Finally, this study contributes to the field of research on visual
representation and decision-making (Lurie and Mason 2007).
To test our hypotheses, we conducted experiments in which
participants were asked to state their price expectations and
purchase timing decisions after viewing a particular price chart
condition, which we had manipulated for our purposes. Further,
we also tested the effects of the same price histories on price
expectations and purchase timing when presented in a non-
graphical manner to explore the effects of the visualization.
The results show that in general, the price charts induce strong
reference price effects. Further, the trend, variance/volatility and
amount of price decline (i.e., range) shown in a chart exert a strong
influence on price expectations. The trend and variance also
exhibit a strong influence on purchase timing decisions. In general,
results indicate that the strength of the impact of the chart
characteristics increases with long-term price expectations.
Finally, the results clearly demonstrate that the graphical
representation itself enforces the impact of the price trend and
variance on consumer price expectations and purchase timing
decisions.
The remainder of this article is organized as follows. First,
we discuss the related literature and derive the underlying
hypotheses. Second, we present the outline and results of Study 1,
which analyzes the influence of price charts on price expectations
and purchase timing. We then present Study 2, which assesses the
effect of graphical representation. The last section summarizes the
results, discusses managerial implications and presents avenues
for further research.
Related Literature
Consumer Price Expectations for Durables
Expected future prices are particularly important for all
product categories that experience significant price changes
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
over time like consumer durables (Ofir and Winer 2002). Since
price decreases over the product life cycle are fairly common
among durable products, they are widely anticipated by
purchasers of durable products (Balachander and Srinivasan
1998). Marketing literature suggests that consumers form
expectations regarding a product's attributes (most notably
price) based on historical patterns for the attributes of the
product category; they then incorporate these expectations in
their purchase decisions (Bridges, Yim, and Briesch 1995).
There is evidence that consumers form forward-looking
expectations that affect consumer durable purchases (Winer
1985). Consumers expect price declines due to experience curve
effects and plan or delay their purchases accordingly (Doyle and
Saunders 1985). This discussion suggests that due to prior
experiences, consumers develop mental schemas or a set of
expectations about a product category (Sujan, Bettman, and
Sujan 1986). Erdem et al. (2005), for instance, find that in the
case of PCs, consumers generally expect a steady-state rate of
price decline. Further, they find that consumers seem to expect
mean reversion in price declines; i.e., if the decline over the past
few months was greater (or less) than normal, then consumers
expect a lesser (greater) price decline over the next few months.
However, since durables have longer interpurchase times
than frequently purchased packaged goods (FPPG) consumers
are normally less informed about the development and changes
of attribute configuration, technology, and price level of a
durable. The information acquired during prior purchase
occasions is therefore less salient in the formation of price
expectations for a durable product than it is for a FPPG
(Mazumdar, Raj, and Sinha 2005). With the introduction of
information about a product's price history displayed in a price
chart, consumers no longer have to rely on likely obsolete price
knowledge based on prior experience when forming price
expectations for purchase timing of durables. Therefore, it is
essential to investigate whether the introduction of price charts
induces reference price effects in terms of adjusting prior price
expectations and how different chart patterns affect price
expectations and purchase timing.
Price Chart Information and Consumer Purchase Decisions
In the marketing literature, the influence of price history
visualized in a line chart and chart pattern characteristics on
consumer decisions is not discussed.
Research on behavioral finance suggests that investors base
their investment decisions on specific stock price chart
characteristics. Standard economic theory, however, assigns
little informative value to stock price charts due to the random
walk assumption (Brealey, Myers, and Allen 2007). Accord-
ingly, historical price movements shown in a chart should not
predict how a stock will behave in the future. Nevertheless,
research shows that some investors base their investment
decisions on specific stock price-chart characteristics. Muss-
weiler and Schneller (2003) show that investors use salient
standards in price charts such as salient highs or lows for their
future stock price expectations and, thus, for investment
decisions. Additionally, Benartzi and Thaler (1999) show that
97
a varying time horizon for past performance charts induces a
significant influence on a trader's investment decisions.
Especially with regard to investment decisions to sell or buy,
investors follow stock price trends typically visualized in price
charts. Indeed, many investors practice technical analysis of
price chart patterns (Leigh et al. 2002), which presumably
identifies patterns in price charts that may offer an indication of
whether a trend is likely to continue or terminate (Park and
Irwin 2007). Of course, such a possibility is in principle ruled
out by the random walk assumption, and so many researchers
are quite skeptical of these ideas. However, practitioners use
them routinely for trading (Caginalp and Balenovich 1996), and
so the price chart can be regarded as standard information for
investors. Typically, technical analysis is operationalized
through trading rules of the following form: “If chart pattern
X is identified then buy/sell within/after the next N trading
days” (Leigh et al. 2002). This means that by using chart
information, investors try to maximize their profits and hence
the economic value of their transactions.
Likewise, in the case of durable products, consumers also try
to maximize the economic value of their transaction, since they
typically make a trade-off between buying now or later when
the price level has reached a certain level. In particular, they try
to maximize transaction utility. This transaction utility increases
when the price meets or falls below an expected price (Darke
and Chung 2005). Hence, price charts on a product's price
history should also support consumers when forming future
price expectations and when making purchase decisions.
However, there is no study available that provides insights
on the influence of price charts on consumer price expectations
and purchase decision for products that are priced according to
their stage in the life cycle.
Study 1
Expected Effects and Hypotheses Development
Reference Prices — Anchoring and Adjustment
According to adaptation-level and assimilation-contrast
theories, price information (or external reference prices) affects
consumer perceptions when it is judged acceptable or plausible
relative to the internal price standards of consumers (Monroe
2003; Urbany, Bearden, and Weilbaker 1988). These processes
also occur when consumers are exposed to a price that is outside
the expected range but still plausible. Instead of rejecting this
price information outright, consumers assimilate and reduce it
to a level more reasonable for the product category (Urbany,
Bearden, and Weilbaker 1988). Taken together, these points
indicate that consumers who encounter new price information
tend to update their prior (Yadav and Seiders 1998) price
expectations. Hence, we expect that consumers use price charts
showing the development of past prices to update (adjust) their
prior price expectations.
Influence of Chart Characteristics
A key feature of high-tech durables is the tendency for prices
to fall quickly over time, creating an incentive to delay
98 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
purchases. The strength of this incentive depends on consumer
forecasts of how quickly prices will drop (Erdem et al. 2005). In
the formation of price expectations for durables, consumers
especially use product histories if a trend exists (Mazumdar,
Raj, and Sinha 2005). In general, consumer expected prices for
time period t are then equal to the current price plus a fraction
reflecting the difference between this period's price and last
period's price (i.e., extrapolative expectations). This means that
consumers update their price expectations by factoring in a price
trend observed from prior prices (Mazumdar, Raj, and Sinha
2005).
Therefore, we expect that consumers who systematically
process chart information use trend characteristics (that is, weak
vs. strong downward trends) as a salient standard (i.e., chart
characteristic) to form their expectations and make their
decisions. If consumers notice a strong decrease in price from
one week to the next, they may expect even lower prices in the
future and decide to acquire the product only if a certain price is
reached (Kalyanaram and Little 1994). In the case of a weak
decrease in which the trend of past prices levels off (i.e., long-
term stationarity of price series), consumers instead may
forecast no further price decreases such that postponing does
not seem worthwhile. These points lead to the following
hypothesis:
H1. Price charts with a strong downward price trend compared
to price charts with a weak downward trend lead to a) a
downward shift in price expectations and b) a postponement of
the purchase time.
Besides trend characteristics, we expect that the variance in a
chart (i.e., price fluctuations from one point to another) is
another important chart characteristic. Research shows that
consumers might use the variance of observed prices as a
heuristic for price search behavior (Darke, Chaiken, and
Freedman 1995). The underlying idea is that the more variance
consumers observe in prices, the more likely they will be to
continue to search. They defer their purchase decision in the
belief that further searching will pay off. Kalwani and Yim
(1992) also provide empirical evidence that consumers expect
prices to strongly decrease in light of frequently-changing
prices. This leads to the following hypothesis:
H2. Price charts with a high variance in past prices compared to
price charts with a low variance in past prices lead to a) a
downward shift in price expectations and b) a postponement of
the purchase time.
Besides expecting direct effects of the trend and variance on
price expectations and purchase timing, we further assume that
these two chart characteristics are not perceived independently.
That is due to the fact that determining a trend in a set of past
prices requires a consumer to interpolate between a large number
of data points (Vessey 1991). If, however, the variance of these
data points increases, it becomes more difficult to interpolate in
order to infer the underlying trend correctly. Put differently, the
trend becomes less obvious in a highly volatile price series. This
leads to the following hypothesis:
H3. A high variance in prices displayed in a price chart
moderates the effect of the chart's trend on a) price expectations
and b) purchase time.
According to range and range–frequency theories (Parducci
1965; Volkmann 1951), consumers judge actual prices not only
by their location within the distribution of other prices but also
by the perceived range at the time of judgment. Range theory
postulates that consumer price perceptions depend on a
comparison of a market price to the endpoints of an evoked
price range. Janiszewski and Lichtenstein (1999) show that in a
high-range price situation in which the market price is nearer the
lower endpoint, consumers judge the market price as more
attractive as compared to a low-range situation. In the context of
price charts, we accordingly expect to find an impact of the
range of the historical prices on price expectations and purchase
timing. In particular, we propose that the difference between the
first and last price in the chart (that is, the range) affects price
expectations because it establishes a benchmark for the
evaluation of the actual price. If the range between the first
and last prices in the price history increases, consumers should
evaluate the last price (i.e., actual price) more favorably, as it
indicates a higher gain within a certain time frame. Due to the
assumption of extrapolative expectations, consumers should
consequently also expect higher rates of price decline in the
future. Thus, this leads to the following hypothesis:
H4. Price charts with a high range of past prices compared to
price charts with a low range of past prices lead to a) a
downward shift in price expectations and b) a postponement of
the purchase time.
Methodology
To test the hypotheses, we conducted experiments in which
participants are asked to state their price expectations and
purchase timing decisions after viewing a particular price chart
condition that we manipulated.
Study Design Manipulations
As indicated in the introductory section, consumers use
shopbots most frequently for gathering information about prices
for durables, especially consumer electronics. In order to
determine the appropriate product category for the experiment,
we therefore conducted a pre-test with 63 participants. Given the
overall goal of this study, the aim of the pre-test was to identify a
durable product category for which purchase timing plays an
important role. Therefore, the participants rated on a 7-point scale
the importance of purchase timing for the three most popular
electronic product categories on Internet shopbots, namely,
notebooks, MP3-Player/IPods and digicams. Results show that
differences in mean across all three categories are significant at
p b .05, with the highest score for the notebook category
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
(MNotebook = 6.06, SDNotebook = .83). Consequently, we use the
notebook category in the main study.
The time horizon of the price charts used in the experiment was
set to three months, since a typical lifecycle of a notebook model
is only about six months (Guide, Muyldermans, and Van
Wassenhove 2005). The time horizon of three months seemed
appropriate because it neither indicates that the notebook is at the
end of its life cycle, nor that it was recently introduced, which
could cause the majority of consumers to wait for better prices.
The experimental design encompasses price chart manipula-
tions in terms of the actual downward trend (strong vs. weak),
variance (high vs. low) and price range (i.e., the rate of price decline
(high vs. low)), resulting in a 2 × 2 × 2 between-subjects design. The
trend manipulations are given by the two most representative chart
patterns of notebook past prices on price comparison sites.
The procedure to assign realistic price levels and price patterns
to the different chart conditions was as follows. First, we inferred
information about the most popular notebooks in the market and
their prices from Amazon's top 100 selling notebooks. We
calculated a mean sales price as a rank-weighted sales price of the
top 100 notebooks. Calculation of the average notebook price
delivers a mean price of MPrice = 828.66€ (SDPrice = 478.59€).
Based on this result, we assigned 850€ as the actual lowest price
to the notebook in the experiment. Second, we ensured that price
declines follow realistic levels and patterns. Different shopbots
show price declines for notebooks within a three-month period
ranging from 10 to 30%. For the low-range condition, we
therefore assigned 1000€ as a start price corresponding to a 15%
price decline. Furthermore, 1150€ was the price assigned to the
high-range condition corresponding to a 26% price decline. The
intervals on the horizontal axis of the charts were adjusted
accordingly, holding all else equal. Examples for this manipula-
tion in the low-range condition are presented in Fig. 2.
Fig. 2. Example charts.
99
To create a realistic shopbot environment for all treatment
groups with price charts and a control group (that is, without price
chart), we further constructed a price comparison table with
current prices for 10 competing retailers. In this price comparison
table, the minimum price of 850€ corresponds to the last price in
the chart. Compared to the treatment groups, the control group
only received the price comparison table of actual prices without
information on the notebook's past prices. Other potentially
available information, such as shipping fees and retailer ratings,
were kept constant. This latter information was only provided for
creating a more realistic experimental environment. Hypothetical
brands for the notebook, shopbot (namely, cheaper.com), and
retailers (listed in the price comparison table) were used to
minimize the potential participant's tendency to base their
decisions on brand and retailer images or previous experiences
(Kwon and Schumann 2001). Furthermore, the overall quality of
the notebook and retailers were rated as very good to avoid the
effect of quality uncertainties.
Experimental Procedure
Participants were asked to imagine that they have a desktop
computer they bought several years ago that is currently working.
They were further told that this computer is technically out of date
and too inflexible and that they are thinking about buying a
notebook in order to make their work more efficient. The aim of
framing the story this way was to prevent participants from feeling
pressure that an immediate purchase was necessary.
In particular, the participants were told that they have decided
to buy a specific notebook because of its convincing price
performance ratio. After providing them with the average offline
price of this notebook they were exposed to additional
information about the desired notebook's current prices at a
shopbot website and ask to make their final purchase timing
100 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109

decision. To eliminate effects caused by financial constraints, To test the impact of chart characteristics on the level of price
participants were provided with a budget of 1000€, which expectation and purchase timing, another measure was
exceeded the actual lowest price of the notebook (850 €). calculated that relates future price expectations to the current
In total, 531 people participated in an online experiment and price of 850€:
were randomly assigned to one of nine conditions, including
eight treatment groups plus one control group. In particular, a 2
(trend) × 2(variance) × 2(range) between-subject design PEt after
PEt = ; with t = 4; 8; 12 weeks 2Þ
(N = 427) was employed such that each treatment was exposed 850
to a price comparison table of current prices and one of the
manipulated price charts with the notebook's price history. The Since our experimental framing indicates that the notebook
control group (N = 104) only received the price comparison has already been on the market 12 weeks, then 12 weeks into
table of current prices. the future would typically correspond to the end of its life cycle
In the treatment groups, participants were asked twice to state (i.e., 6 months). We therefore denote price expectations over the
their price expectations concerning the notebook's minimum next 12 weeks as long term for notebooks.
price development at price points of 4, 8 and 12 weeks later. This Purchase timing was measured with the question “Given the
question first appeared after participants saw the price comparison information from cheaper.com, when would you most likely
table alone; it appeared second after being exposed to the price buy this notebook?” Responses were anchored at a weekly scale
comparison table and the price chart together. Finally, participants from 1 = “now” up to 14 = “after 12 weeks.”
were told to think about the optimal time to purchase the
notebook. In the control group, participants indicated their price
Results
expectations and planned purchase timing directly after seeing the
price comparison table. After participating in the experiment,
Manipulation Checks. To assess whether the levels of trend
participants filled out an online questionnaire. In order to control
and variance in the charts were actually perceived as different, the
for individual differences between participants, we measured
participants in each treatment group were asked to rate the slope of
important covariates that might affect price expectations and
the trend and the level of price fluctuations in the price chart on a
purchase timing.
7-point scale from 1 = low to 7 = high. Results of a 2 × 2 analysis
In particular, we controlled for participant usage and/or
of variance indicate that participants significantly perceive
experience with shopbots and the information they use on
differences in slope (Mstrong trend = 5.57 vs. Mweak trend = 4.61, F
shopbots (e.g., price chart used = 1, not used = 0). In total, 79% of
(1,426) = 131,9, p b .01) and variance (Mlow variance = 3.26 vs.
participants indicated that they regularly use shopbots for finding
Mhigh variance = 4.42, F(1,426) = 103,94, p b .01) as intended.
offers, whereas 31% of these shopbot users also use price chart
Furthermore, we find no significant interaction between our
information.
independent variables on the perceived level of variance (F
Regarding consumer psychographics (see Appendix), we
(1,427) = 2.58, p N .10). For the trend, however, results show a
control for deal proneness and notebook expertise as literature
significant interaction (F(1,427) =16.56, p b .01), indicating that
indicates that they are related to price expectations, timing
the level of trend is not perceived independently from the level of
decisions and information processing (Biswas and Sherrell,
variance.
1993; Lurie and Mason 2007; Martinez and Montaner, 2006;
To check the relevance of price charts for purchase timing
Rao and Sieben 1992). Finally, we control for the individual's
decisions, participant perceptions of the relevancy of the
evaluation of the current notebook price, as this might affect
shopbot information were assessed with three 7-point Likert-
study results. In particular, participants should indicate the
type scale statements (Mason et al. 2001). Higher scores
perceived expensiveness of the current notebook price.
indicate that participants perceived the information provided as
more relevant information (coefficient alpha = .90). With respect
Key Measures
to purchase timing, participants in the price chart condition
As indicated in the previous section, the treatment groups,
perceived the information provided by the shopbot as more
which are provided with price charts, were asked twice about their
relevant (MChart = 4.49) as compared to the control group, who
price expectations regarding the minimum price in the future. In
received the price comparison table only (MNo Chart = 3.83,
particular, they were asked about the expected future minimum
t = 3.85, p b .01). This first result reveals that the price chart is a
prices of the notebook in the upcoming 4, 8 and 12 weeks
useful tool for consumers who are deciding when to buy a
(PEt before). Updates of these three price estimates were obtained
product.
after participants received additional information about the
notebook's price history (PEt after). Reference price effects are
measured in terms of the adjustment of price expectations (ΔPEt) Price Expectations — Anchoring and Adjustment
in response to the chart as follows: ANOVAs and pairwise comparisons between all eight
treatment groups show no significant differences in price
expectations measured prior to the exposition to the chart
PEt before−PEt after information (PEtbefore). Results also show no significant
ΔPEt = ; with t = 4; 8; 12 weeks 1Þ
PEt before differences between the control group's price expectations
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109 101

Table 1 Table 2
A priori price expectations in euros (PEt before). Adjusted price expectations.
4 weeks 8 weeks 12 weeks Δ Price expectations (ΔPEt )
Mean 823 795 756 Chart version N Week 4 Week 8 Week 12
Std. 42 54 74
Range: low
N = 427. 1) ST_LV 52 −.038*** −.073*** −.086***
(−6.68) (− 7.11) (− 5.02)
2) WT_LV 51 .005 .020** .048**
(0.72) (2.06) (3.26)
and the treatment groups' prior expectations. Hence, partici-
3) ST_HV 50 −.015** −.032*** −.049***
pants seem to have homogeneous expectations about the future (−2.46) (− 3.28) (− 3.86)
development of notebook prices. In particular, participants seem 4) WT_HV 50 .014* .021* .048***
to expect a monthly steady-state rate of price decline of 3.8%. (1.72) (1.70) (2.79)
Table 1 shows the mean expected prices for the next 4, 8 and
Range: high
12 weeks.
5) ST_LV 56 −.037 −.077*** −.106***
After the treatment groups were exposed to the price chart, (−5.45) (− 6.05) (− 6.78)
nearly all groups adjusted their price expectations. Table 2 6) WT_LV 61 .016 .022** .033***
reports the percentage change in price expectations (ΔPEt) for (1.42) (1.96) (2.32)
the eight different chart version groups and shows whether this 7) ST_HV 55 −.026*** −.049*** −.075***
(−2.65) (− 4.75) (− 5.42)
change significantly deviates from zero.
8) WT_HV 52 −.023*** −.029*** −.028**
Results clearly demonstrate that the different price charts (−3.12) (− 3.08) (− 2.21)
lead to adjustments of price expectations in both directions. For
***p b .01, **p b .05, *p b .1, t-values in parantheses.
instance, in the conditions including the strong downward trend Notes:
(versions 1, 3, 5 and 7), participants significantly lower their ST (WT) = strong (weak) downward trend.
price expectations for all three point estimates. The strongest HV (LV) = high (low) variance.
downward adjustments take place for the long-term price
expectations (i.e., 12 weeks) ranging from − 4.9% (version 3) to
− 10.6% (version 5). In contrast, the low-trend condition leads different price expectation measures for the upcoming 4, 8 and
to an adjustment in the other direction. In particular, participants 12 weeks are related to each other as confirmed by the Pearson
of the chart versions 2, 4, and 6 raised their prices expectations, correlation coefficients (ranging from .79 to .93, p b .01), we
especially for weeks 8 and 12. have to control for this correlations (Tabachnik and Fidell,
The results clearly show that the availability of price charts 2007). Hence, we analyse the data by MANCOVA through a
induce reference price effects in terms of adjusting price multivariate generalized linear model (GLM).
expectations, which stresses the chart's relevance for purchase In addition to the price chart characteristics, two covariates
decisions. Additional analyses that compare the price expecta- (namely, notebook expertise and price chart usage = 1/0) are
tions (PEt) of the different treatment groups with those of the included in the model estimation of each price expectation
control group point in the same direction. For instance, control measure. In particular, we use the following underlying model
group comparisons reveal the strongest differences for the long- structure to estimate the GLM:
term price expectations (i.e., 12 weeks). As compared to the
control group, chart version groups 1, 3, 5, and 7 show PEt = αt0 + αt1 Range + αt2 Trend + αt3 Variance
significantly (p b .05) lower price expectations ranging from + αt4 Trend × Variance ðt = 4; 8; 12Þ
− 5.2% (version 3) to − 9.3% (version 3). Furthermore,
participants of the chart version groups 2, 4 and 6 show higher + αt5 NotebookExpert + αt6 ChartUser + εt;PEt
price expectations (p b .10) than the control group. Hence, these ð1Þ
results indicate that consumers adjust their prior price expecta-
tions depending on chart patterns. Results of the MANCOVA part indicate significant
multivariate main effects for the range (Wilks' Lambda = .98,
Influence of Price Chart Characteristics F(3) = 2.92, p b .05), the trend (Wilks' Lambda = .83, F(3) =
In this section we test hypotheses H1 to H4, i.e., whether 28.10, p b .01) and the interaction between trend and variance
different charts lead to different price expectations and purchase (Wilks' Lambda = .98, F(3) = 2.90, p b .05) on expected prices.
timing decisions. Therefore, we first analyze the influence of Further, the variable chart-user shows a significant multivariate
different chart characteristics on price expectations (PEt) for main effect (Wilks' Lambda = .98, F(3) = 2.76, p b .05).
weeks 4, 8, and 12. In a second step, we test the effects of price To get a more differentiated picture of the impact of different
charts characteristics on participant purchase timing decisions chart characteristics on the three different price expectation
while accounting for price expectations. measures we report the parameter estimates of the GLM in
Table 3.
Effects of Price Chart Characteristics on Price Expecta- As expected, estimation results in Table 3 show that the
tions. Since the three dependent variables, i.e., the three direct effects of a high range and a strong downward trend
102 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109

Table 3 chart characteristics and covariates according to (Bhattacharjee

Influence of price chart characteristics on price expectations. et al. 2007)
Price expectations (PEt) 0 1
β0 + β1 Range + β2 Trend + β3 Variance + β4 Trend × Variance
Week 4 Week 8 Week 12
ϕ = exp@ 4 A
+ β5 PEt + ∑ β5 + m Covariates + ε
Coefficient St.- Coefficient St.- Coefficient St.- m=1
error error error
ð3Þ
Chart characteristics
Range −.01*** .005 −.02*** .007 −.03*** .009 This model allows us to test hypotheses H1b to H4b, which
Trend −.04*** .007 −.08*** .009 −.11*** .013
propose direct effects of price chart characteristics on the time
Variance −.01* .007 −.02* .010 −.03** .013
Trend ∗ variance .02* .010 .04*** .014 .05*** .018 of purchase. Prior research indicates that price expectations and
purchase timing are conceptually related (Kalwani et al. 1990).
Covariates Therefore, we control for price expectations by estimating the
Notebook .00 .002 .00 .002 .00 .003 model for each of the three different price expectation measures
expertise PEt (t = 4, 8, 12 weeks). In addition to the covariates included in
Price chart user .00 .006 .01 .008 .02* .011
Constant −.07** .008 −.11*** .012 −.18*** .016 the price expectations models, we control for general deal
R2 (Adj.) .11(.10) .18(.17) .22(.21) proneness and the perceived expensiveness of the notebook's
***p b .01, **p b .05, *p b .1.
current price.
In line with previous research on purchase timing decisions,
we assume that the baseline survivor function S0(t) follows a
Weibull distribution (Helsen and Schmittlein 1993; Seetharaman
and Chintagunta 2003).1 For the estimation, the AFT model in
significantly lower participants' price expectations (p b .01).
Eq. (2) is put into the log-linear form with respect to purchase time
Further, the negative effect of a high variance of past prices
t (Bradburn et al. 2003). The estimation results are presented in
seems to increase from week 4 (p b .10) and week 8 (p b .10) to
Table 4.
week 12 (p b .05). Hence, these results provide strong support
A positive coefficient indicates that increasing values of the
for hypotheses H1a, H2a and H4a. Further, the results show a
respective independent variable lead to a delay of the purchase.
strong significant positive interaction (p b .01) between the trend
By exponentiation of the coefficients, we further obtain the time
and variance for price expectations in weeks 8 and 12 and a
ratio which can be interpreted as a deferral factor (DF) in our
marginal effect for week 4 (p b .10). This finding supports
context (Bradburn et al. 2003). DF indicates whether the chart
hypothesis H3a, which states that the variance in a chart
characteristics lead to a delay of the purchase (DF N 1) as
moderates the influence between the trend and price expecta-
compared to the respective reference group. Results for Model 1
tions. Overall, the results indicate that the magnitude of effects
with price expectations for four weeks as a control variable
increases from week 4 to week 12. This means that the price
reveal strong significant effects for the trend and variance
chart characteristics particularly influence long-term price
(p b .01), showing that a strong downward trend and a high
expectations.
variance of price charts increase the probability that participants
would defer their purchase. In particular, the probability to defer
Effects of Price Chart Characteristics on Purchase Timing.
increases by 32% (DF = 1.32) in response to a strong trend and
The response in the questionnaire concerning the independent
by 34% (DF = 1.34) in response to a high variance. Hence,
variable purchase timing allowed for the option of not buying
hypotheses H1b and H2b are supported. These findings also
the notebook within the upcoming twelve weeks. Indeed, 45
largely hold for Models 2 and 3 (with price expectations for
(10.5%) participants stated they would buy the notebook after
8 and 12 weeks, respectively). However, the effect of the trend
this time frame. Hence, our dependent variable is right
seems to decrease from Model 1(p b .01) to Model 3 (p b .10). At
censored, which implies the need for an event history modeling
the same time, the effect of the price expectations increases.
approach to assess the influence of price chart characteristics on
This result indicates that the variance in the chart is the main
purchase timing (Helsen and Schmittlein 1993).
driver of purchase timing decisions, whereas the direct effect
Following Bayus (1998), who analyzes purchase behavior
of trend weakens when long-term price expectations are
for personal computers, we use a parametric survival model. In
considered for purchase timing. In particular, higher long-
particular, an accelerated failure time (AFT) model is used to
term price expectations for week 12 favor earlier notebook
estimate the effects of chart characteristics on purchase time t.
Generally, we model the effects of the different chart
characteristics and covariates on purchase time t as 1
We also tested other distributions to specify the baseline survivor function
(e.g., exponential and log-logistics). Likelihood-ratio tests and the Bayesian
S ðt Þ = S0 ðϕt Þ ð2Þ information criterion (BIC) confirm that the Weibull distribution best describes
where the survivor function S(t) gives the probability that a the underlying purchase timing process. Further, the shape parameter θ of the
Weibull distribution is highly significant (p b .01) and larger than 1 in all
participant would buy the notebook after some specified models, indicating that the Weibull distribution is more appropriate to describe
purchase time t. S0(t) is the baseline survivor function and ϕ the underlying purchase timing process as compared to, for instance, an
is termed acceleration factor which depends on the different exponential distribution.
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109 103

Table 4
Influence of price chart characteristics on purchase timing.
Model 1 Model 2 Model 3
Coefficient St.-error DFa Coefficient St.-error DFa Coefficient St.-error DFa
Chart characteristics
Range −.01 .068 0.99 −.03 .068 0.97 −.04 .068 0.96
Trend .27*** .095 1.32 .22** .098 1.24 .18* .099 1.19
Variance .29*** .095 1.34 .29*** .095 1.33 .27*** .094 1.32
Trend ∗ variance −.23* .134 0.79 −.20 .134 0.82 −.18 .134 0.83

Price expectation
PE4 −.12 .651 0.89 – – – – – –
PE8 – – – −.85* .483 0.43 – – –
PE12 – – – – – – −.94** .369 0.39

Covariates
Notebook expertise −.07*** .025 0.93 −.07*** .024 0.93 −.08*** .024 0.93
Deal proneness .07*** .022 1.07 .07*** .022 1.07 .07*** .022 1.07
Perceived expensiveness .10*** .026 1.10 .10*** .026 1.10 .09*** .026 1.10
Price chart user −.25*** .079 0.78 −.24*** .079 0.79 −.22*** .079 0.80
Constant 1.70*** .183 5.45 1.67 .182 5.31 1.65*** .182 5.19
θ (shape parameter) 1.56*** .068 1.57*** .068 1.57*** .068
LL (χ2) − 502.26 (58.23***) − 503.86 (55.04***) − 500.42 (61.92***)
***p b .01, **p b .05, *p b .1.
a = Deferral factor = exp(coeff.).

purchases (p b .05). This finding indicates that participants do
not expect strong price decreases in the future, which implies
that longer waiting is not worthwhile (Kalyanaram and Little
1994).
Model 1 shows a marginal significant negative effect
(p b .10) of the interaction term between trend and variance on
purchase timing. Hence, a high variance of past prices reduces
the strong direct effect of the trend, which increases the
probability to buy earlier (hypothesis H3b).
To obtain a complete picture of the effects of the price charts,
we re-estimated the above described survival models by
including the reference group without price charts. In particular,
we entered dummy variables for each of the chart version
groups, while the control group served as the reference
category. Estimation results show that all price chart groups,
except for those exposed to chart version 2 and chart version 5
with low trend low variance, respectively, would significantly
defer their purchase time as compared to the control group
(p b .05). This additional analysis underlines the effects of
strong decreasing trends and high variance of past prices on
purchase timing decisions.
Summary Study 1
Results of Study 1 clearly show that a price chart of a
product's price history is perceived as relevant information for
purchase timing decisions. Further, this information induces
strong reference price effects in terms of adjusting consumer
price expectations. Participants lower or raise price expectations
depending on chart characteristics.
In particular, a strong downward trend, high variance and a
high range of past prices lead to lower price expectations with a
strongest impact on long-term price expectations. Further, the
trend and variance cause participants to postpone their purchase;
put differently, they potentially trigger strategic buying behavior.
Comparisons of the treatment groups and control groups confirm
significant differences in price expectations and purchase timing.
Study 2
The Impact of Visualization
As discussed in the introductory section, the chart itself not
only includes price information but also represents this
information in a graphical manner. Studies in behavioral
finance show that the visualization of past prices itself leads
to a change in investment decisions. Hence, it is necessary to
assess the impact of the graphical representation of price
histories on price expectations and purchase timing decisions to
fully understand the effects of price charts provided by
shopbots. The aim of Study 2 is therefore to disentangle the
effects caused by reference price histories from effects caused
by their visualization.
In general, charts are spatial problem representations, since
they present spatially-related information. Charts are expected
to be both faster and more accurate decision sources than, for
instance, tables (Vessey 1991). According to Larkin and Simon
(1987), charts preserve explicit information about the topolog-
ical and geometric relations among the components of the
problem; that is, they emphasize information about relation-
ships in data. Seminal research reports empirical evidence in
support of the notion that line charts especially facilitate the
recall of trends (Vessey 1991; Washburne 1927). The tabulated
representation of data, in contrast, facilitates the recall of
specific amounts. Therefore, line charts are preferred whenever
it is important for consumers and/or investors to quickly and
easily recognize characteristics of data such as trends, volatility
and functional relations. Thus, we expect that in particular,
104 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
trend and variance in a price history are more visible in a line-
chart than in a table presentation. Accordingly, we expect that
trend and variance exert stronger effects on price expectations
and purchase timing when visualized in a price chart. The
influence of the price range, however, should not be affected by
its presentation format since the start- and endpoints are easily
observable independent of the presentation format. Overall, this
discussion leads to the following hypothesis:
H5. The visualization of the price trend and price variance in a
line chart as compared to the presentation in a table leads to a) a
stronger downward shift in price expectations and b) a
postponement of the purchase time.
Methodology
To assess the influence of the visualization of a product's
past prices in a line chart, we gathered additional data in an
online experiment from N = 399 people who were exposed to the
experimental setting and questionnaire used in Study 1. The
major difference is that the notebook's price history was
presented in a table instead of a chart. Similar to Study 1, 81%
of the participants indicated that they regularly use shopbots for
searching for offers. In addition, 38% of these shopbot users use
price chart information provided by these shopbots.
To guarantee fair comparison between both studies, bi-weekly
prices were shown in the table. This interval was chosen because it
corresponds to the intervals on the horizontal axis in the chart
conditions from Study 1. Everything else (i.e., dependent and
independent variables) were measured in the same way as in
Study 1. Fig. 3 shows two examples with the prices corresponding
to the chart versions 1 (that is, low range, strong trend and low
variance) and chart version 2 (that is, low range, weak trend and
low variance).
Results
In this section we first report the empirical results of table
conditions. Second, we explicitly test hypothesis H5, i.e., we
show how the visualization itself (chart vs. table) affects price
expectations and purchase timing.
The Influence of Tabulated Price Histories on Price
Expectations and Purchase Timing
As in Study 1, participants show no significant differences in
their a priori price expectations (PEtbefore). ANOVA and pair
Fig. 3. Example tables.
wise comparisons also show no significant differences between
the treatment (tables, charts) and control (no price history)
groups. Hence, participants again express homogeneous price
expectations before they are exposed to the price history.
Corresponding to Study 1, we estimate MANCOVA through a
multivariate generalized linear model (GLM) to investigate the
influence of the price history characteristics on price expectations
(after respondent's were exposed to the table conditions). The
results show multivariate main effects for for the range (Wilks'
Lambda = .97, F(3) = 4.26, p b .01) and the trend (Wilks' Lamb-
da = .93, F(3) = 10.01, p b .01). Furthermore, the parameter
estimates of the GLM confirm that a strong downward trend
and a high range of past prices (p b .01) shift down all three price
expectation measures (weeks 4, 8, and 12). However, compared
to the chart condition in Study 1, the results show no significant
effects of the variance and the interaction effect between variance
and trend on price expectations. Furthermore, estimating the
corresponding survival models for purchase timing reveals only
marginal negative directs effects (p b .10) for the range in Model 2
and Model 3. Together, these results indicate that the visualization
itself might have an influence on the strength of the effects in
Study 1. This seems particularly plausible because no direct
effects of the price history characteristics on purchase timing are
apparent in the table condition, whereas the trend and range still
have an influence on price expectations. Further, the results show
no significant effect of the variance on price expectations
indicating that this characteristic is difficult to recognize in a
table. Accordingly, we explicitly test hypothesis H5, i.e., the
effect of the graphical representation (visualization) on price
expectations and purchase timing in the next section.
The Impact of Price History Visualization on Price
Expectations and Purchase Timing
Since we employed a between subjects design in Study 1 and
Study 2 we are able to directly assess the influence of the
visualization effect itself. In particular, we re-estimate the
models presented in Study 1 by incorporating participants from
both studies (N = 826). Hence, we introduce the visualization as
an additional factor (1 = chart, 0 = table) into the analysis.
Examining the interaction effects between price history
characteristics and whether they are presented in a chart or a
table should reveal the effect of the visualization. With respect
to the chart characteristics the MANCOVA part of the
estimation procedure shows multivariate effects only for the
range (Wilks' Lambda = .98, F(3) = 4.32, p b .01) and the trend
(Wilks' Lambda = .96, F(3) =10.40, p b .01). In addition, the
covariate chart-user exhibits a multivariate main effect (Wilks'
Lambda = .98, F(3) = 5.75, p b .01).
However, results of the GLM part in (Table 5) reveal deeper
insights into the effect of the visualzation on the three price
expectation measures (PEt).
Estimation results show that the visualization of price history
characteristics as a chart increases the effects of a strong
downward trend for PE8 and PE12 (Chart ∗ Trend; p b .05). This
effect is stronger for long-term price expectations (week 12)
than for short-term expectations (week 4 and week 8). Thus,
hypothesis H5a is in generally supported with regard to the trend
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109 105

Table 5
Influence of the visualization of past prices on price expectations.
Price Expectations (PEt)
Week 4 Week 8 Week 12
Coefficient St.-Error Coefficient St.-Error Coefficient St.-Error
Price history characteristics
Range −.01** .005 −.02*** .007 −.03*** .009
Trend −.02*** .008 −.05*** .010 −.07*** .013
Variance .00 .008 .00 .010 −.01 .013
Trend ∗ variance .00 .011 .01 .014 .02 .019

Visualization
Chart vs. table .01 .008 .01 .011 .02 .015
Chart ∗ range .00 .007 .00 .010 .01 .013
Chart ∗ trend −.02 .010 −.03** .014 −.04** .018
Chart ∗ variance −.02 .010 −.02 .014 −.02 .018
Chart ∗ trend ∗ variance .02 .015 .03 .020 .03 .026

Covariates
Notebook expertise .00 .001 .00 .002 .00 .002
Price chart user .00 .004 .01* .006 .02*** .007
Constant −.03*** .008 −.06*** .011 −.09*** .000
R2(Adj.) .08(.07) .15(.13) .15(.17)
***p b .01, **p b .05, *p b .1.

effect. As expected, the effect of the price range (p b .05) is
independent of visualization. Similarly, the results show no
significant direct and indirect effects of the variance on price
expectations, indicating that this effect vanishes under the non-
graphical condition. Table 6 shows the effects of visualization
on purchase timing decisions estimated by use of a survival
model, as in Study 1.
The survival models in Table 6 show that the direct effects of
trend and variance are not significant, which indicates that they
are mainly driven by the way they are presented to participants.

Table 6
Influence of the visualization of past prices on purchase timing.
Model 1 Model 2 Model 3
Coefficient St.-error DFa Coefficient St.-error DFa Coefficient St.-error DFa
Price history characteristics
Range −.11 .072 .89 −.13* .072 .87 −.15** .072 .86
Trend −.06 .101 .94 −.08 .101 .92 −.10 .101 .91
Variance −.08 .101 .93 −.07 .101 0.93 −.07 .100 .93
Trend ∗ variance .10 .142 1.10 .08 .142 1.09 .09 .141 1.09

Visualization
Chart vs. table −.29*** .112 0.75 −.28** .112 .75 −.27** .112 .76
Chart ∗ range .11 .099 1.11 .12 .099 1.12 .11 .099 1.12
Chart ∗ trend .34** .139 1.40 .31** .139 1.36 .29** .139 1.33
Chart ∗ variance .38*** .141 1.46 .37*** .140 1.44 .36** .140 1.43
Chart ∗ trend ∗ variance −.33* .199 .72 −.29 .199 .75 −.27 .199 .76

Price expectation
PE4 −.21 .455 .81 – – – – – –
PE8 – – – −.89** .362 .41 – – –
PE12 – – – – – – −.92*** .278 .40

Covariates
Notebook expertise −.08*** .017 .93 −.08*** .017 .92 −.08*** .017 .92
Deal proneness .06*** .017 1.07 .07*** .017 1.07 .06*** .017 1.07
Perceived expensiveness .12*** .019 1.13 .12*** .019 1.12 .12*** .019 1.12
Price chart user −.17*** .057 .84 −.17*** .057 .85 −.15*** .057 .86
Constant 1.89*** .141 6.65 1.85*** .141 6.35 1.83*** .141 6.22
θ (shape parameter) 1.50*** .047 1.51*** .047 1.51*** .047
LL (χ2) − 1006.86 (100.03***) − 1003.83 (106.35***) − 1001.21 (111.58***)
***p b .01, **p b .05, *p b .1.
a = Deferral factor = exp(coeff.).
106 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
Indeed, these results confirm that in all three survival models, the
visualization of the trend (strongly decreasing) and variance
(high) as a chart increases the tendency to defer the purchase
(interaction terms; p b .05). Hence, hypothesis H5b is supported.
Similar to Study 1, we again find that the variance exerts the
strongest impact on purchase timing decisions.
Fig. 4 shows that in the case of a price chart with a strong
downward trend, the survival model (model 3)predicts that
participants would in general defer their purchase by 41.1 % as
compared to the control group without a price history. Further, the
predictions show that 16.9 percentage points can be attributed to the
visualization. In the case of a price chart with a high variance, this
effect becomes much stronger. In particular, 20.3 percentage points
of the total effect can be attributed to the visualization, which is
nearly the half of the total effect. Hence, 50% of the total effect is
caused by the price history information and 50% by the
visualization.
Summary Study 2
Study 2 reveals that the negative impact of the strong
downward trend of a notebook's past prices on price expectations
can partly be attributed to its visualization. Furthermore, the
visualization of the trend and variance exhibits a strong influence
on a consumer's purchase timing decisions. This means that not
only the information about past prices influence consumer
decision-making but also the graphical presentation itself.
Discussion
General Findings
This research investigates whether price charts regarding a
product's price history induce reference price effects and how
chart characteristics affect consumer price expectations and
purchase timing decisions. The results of Study 1 show that the
price chart is perceived as highly relevant information with
which to form price expectations and to plan purchase time.
We find that charts illustrating a product's price history induce
strong reference price effects. This means that consumers adjust
their prior price expectations according to chart characteristics.
Like investors, consumers especially follow price trends in
predicting prices and planning purchase timing. Besides a strong
downward trend and high variance, a high range of past prices,
Fig. 4. The impact of price history visualization on purchase timing.
i.e., a large amount of price decline, leads to a downward shift in
price expectations. Further, the influence of price trends is
moderated by the variance of the past price series. Overall, the
results indicate that the strength of the impact of chart
characteristics increases with long-term price expectations.
Study 2 shows that the previously discussed effects can partly be
attributed to the visualization of price history. The visualization
especially exhibits strong effects on consumers' purchase timing
decisions.
In particular, for a strong downward trend, 16.9 percentage
points of the total effect of the price history is caused by
visualization, which corresponds to 41.1% of the total effect.
Under the condition of high variance, this effect is much stronger
and reaches 20.3 percentage points, which is nearly 50% of the
total effect. Hence, the trend and variance of the price charts are
the most important chart characteristics.
Implications
From a consumer's perspective, the results of this study show
that price chart information is especially valuable in situations in
which the price history indicates a stronger future decrease and
high variance of prices than consumers would have expected.
When charts indicate that prices will further decline, this
information is incorporated into consumer expectations and
helps them to maximize the transaction utility, i.e., to predict
prices and to purchase when the price meets or falls below the
future expected price. Hence, from a consumer's perspective
price, charts provided by shopbots are valuable information that
serves as an anchor to support consumer purchase decisions. For
this reason, the price chart feature is positively evaluated by, for
instance, the press when comparing and recommending different
shopbot sites (SmartMoney 2010). Based on the above discus-
sion, it is obvious that from a shopbot's perspective, the provision
of price charts is worthwhile because it is perceived as containing
valuable information from a consumer's and a public policy
maker's perspective. Hence, we recommend that shopbots
provide price charts in order to increase their popularity.
From a manufacturer's and retailer's perspective, however,
consumer reactions to the price chart information can have a serious
impact on sales and profits. This is because consumers adjust their
reference prices depending on the price chart pattern. On the one
hand, price charts can help to uphold price expectation levels, but
 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109 107

on the other hand, they can accelerate anticipated price declines. transaction data in a real-world setting. Such a setting would
This problem is especially relevant for durable products with allow researchers to measure the actual effects of purchase
typical life cycle pricing patterns, since price expectations exhibit a postponement on conversion or click rates. Third, it would be
strong influence on price elasticities. Reference price effects interesting to incorporate the effect of price charts in demand
triggered by price chart information should therefore affect price models in order to derive optimal pricing decisions. When
elasticities in the market, which subsequently affect retailer and modeling reference prices through first-order exponential
manufacturer sales. The reason behind this rationale is that price smoothing, a systematic error occurs when a trend is present.
chart information is especially valuable for imitators and followers According to our findings concerning the relevance of price
in the adoption process of durables, since they normally buy at a trends, it would be interesting to model reference prices through
later stage and at a lower price level in a product life cycle. Hence, second-order exponential smoothing. Fourth, since we focus on
durables face increasing absolute price elasticities until the end of the most popular product category on shopbot sites that normally
their product life cycle (Parker and Neelamegham 1997). When experiences significant price decreases over time, we only used
price chart information leads to a change in price expectations, these declining price charts in the experiments. However, future
dynamics affect when manufacturers break even because chart research could extend our research by using categories with
information can lead to a shift in periodic sales due to increased price increases as well as decreases (e.g., airline tickets). Finally, it
strategic planning of the more price sensitive segment of followers would be interesting to investigate the effect of the price chart
in the market. Since this segment is normally responsible for the information on consumer replacement decisions, especially in
bulk of the purchases over the whole life cycle of a product, this technology markets (Gordon 2009).
problem also affects retailer margins because they often acquire
products at later times for a reduced price from the manufacturer.
Nevertheless, it is important to note that retailer competition in Acknowledgements
a shopbot setting especially drives price chart patterns. This is due
to the fact that retailers mostly compete on their rank in the price The authors gratefully acknowledge many helpful comments
comparison table of actual prices since it is possible to gain sales from the editors and the two anonymous reviewers.
by implementing a small price decrease (Iyer and Pazgal 2003;
Smith 2002). Hence, we recommend retailers to balance the effect
of constantly reducing prices at present with the long-term effect Appendix
caused by this strategy on sales and profit development.
In summary, the results of the study show that the initial price
expectations of participants are homogeneous and that depending
on chart characteristics, participants adjust their price expectations.
Coefficient
Manufacturers and retailers should infer from shopbot sites how
alpha
market price expectations develop over time and should incorporate
this information in their dynamic pricing strategy. However, as long Construct Scale items Source Study Study
1 2
as not all consumers use price history information about a product's
price history, there is still some uncertainty about the market price Deal I wait until there is an Roy (1994) .73 .71
proneness advertised sale before
expectations. Hence, it would be useful to make price history going to shop at a mall.
information available to all consumers in the market. I hunt around until I find a
real bargain.
Limitations and Future Research Notebook I regularly use notebooks. Roehm and .73 .77
expertise I am very familiar with Sternthal
notebooks. (2001)
In this study, we find significant effects of price charts on I would call myself a notebook
purchase timing and expected future prices. To isolate the chart expert.
effects, we eliminated dynamic effects such as consumer learning, Shopbot The information provided by Mason et al. .90 .90
brand choice, brand switching and shopbot and retailer switching, information the shopbot was relevant for (2001)
which could also be triggered by viewing the price chart. A first relevancy the purchase timing task.
The information that was
direction for future research would therefore be to assess the provided by the shopbot would
influence of this additional information on consumer behavior help me in making purchase
and on the profitability of shopbots, retailers and manufacturers. It timing decisions.
would also be worthwhile to identify product categories that link The information provided
the strengths of these effects. Further, one could extend future by the shopbot aided me
in completing the
research to another setting in which the supply of the product purchase timing task.
category is limited. For instance, Microsoft's Bing travel website Perceived The actual price Yoo, .85 .80
(http://www.bing.com/travel/) provides graphs of historical prices expensiveness of the notebook is high. Donthu, and
for flight tickets. The goal of this service is to predict air travel The actual price of the Lee (2000)
prices and offer the consumer advice about when to purchase a notebook is expensive.
ticket. Second, it would be useful to analyze a shopbot's Note: All scales ranged from 1 = “Totally disagree” to 7 = “Totally agree”.
108 W. Drechsler, M. Natter / Journal of Interactive Marketing 25 (2011) 95–109
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