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| Author: | Knox, G. Eliashberg, J. |
| Title: | The consumer's rent vs. buy decision in the rentailer |
| Journal: | International Journal of Research in Marketing
2009 : JUN, VOL. 26:2, p. 125-135 |
| Index terms: | marketing consumer behaviour consumer choice decision making purchasing models segmentation pricing service USA |
| Language: | eng |
| Abstract: | This paper focuses on the perspective and business model of the rentailer, that's a retail outlet renting and selling new and used (here as: n-and-u.) home video titles. This requires predicting the consumer's decision to rent or buy a particular title, segmenting its customer base, and pricing n-and-u. titles. A new model is developed based on a simple heuristic found in the behavioural marketing literature of how people predict their own usage of a service. The model is estimated using a unique panel dataset from a large rentailer. It is found to provide a good fit to the data. Based on the model estimates, a metric is obtained indicating a latent customer tendency to buy at full price compared to buying at a lower price or renting. Other diagnostics from the model may help convert renters into buyers: 1. expected viewing may be pitched for persuading consumers that the movie will be well utilized, and 2. the model is used to generate customized n-and-u. title prices. |
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