Abstract

We thank Marriott International for providing financial support and data and fine.com for assistance with online data collection. We also thank the participants at the Marketing Science Conference on Internet at Boston for their helpful comments. 2 Customer Price Sensitivity and the Online Medium The nature of the online medium and the characteristics of web sites can significantly alter the degree of customer price sensitivity in online markets. Many managers fear that the Internet will increase price sensitivity and intensify price competition. There is, however, very little conceptual or empirical research on this topic. In this paper, we use the information search literature to develop a conceptual framework comprising web site factors and several customer and intermediary factors, to explain the main and moderating effects of the online medium on customer price sensitivity. We use this framework to develop hypotheses, which we test using data from both online and offline customers in the hospitality industry. We examine two important aspects of price sensitivity: the relative weight a customer attaches to price compared to other attributes (price importance), and customer’s perceived value of

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