Discount travel Web sites can be a bargain-hunter's dream--but a new study suggests some of these sites may jeopardize financial success by making their users feel mistreated. The study found that a site draws customers' greatest ire when it provides long response times, frequently rejects bids and unexpectedly switches from a set-up where visitors offer one take-it-or-leave-it bid to a set-up where visitors repeatedly enter higher bids.
In the study, published in APA's Journal of Applied Psychology (Vol. 89, No. 3), Stephen E. Humphrey, a graduate student in the department of management at Michigan State University, and colleagues investigated consumer reactions to popular Web sites that offer discounted prices on hotels, airfares and the like. Some sites feature negotiation structures--that is, users bid on services, are quoted a price, then can change the conditions, such as the flight times, to find better deals. But many sites employ an all-or-nothing ultimatum structure: Visitors bid once, and the site rejects or accepts bids without negotiation, often without the visitor knowing the bid terms. Some sites prompt users to rebid a higher amount to improve their chances of acceptance--even though they fail to mention this beforehand, Humphrey says.
The researchers theorized that changing the expected format of the transaction--that is, asking the users to rebid when they thought the transaction was all-or-nothing--would violate users' understanding of the transaction and leave them feeling wronged and unlikely to revisit the site.
To test their theory, they instructed 154 college undergraduates to bid for a San Diego hotel room on a fictitious site, PriceFine.com, which the researchers claimed was a real site in testing phases. Participants gave their bids to researchers, who then left the room and returned with computer printouts informing students if their bids were accepted. Half the participants waited four minutes for these results; the rest waited 15 minutes. Half of the bids were accepted, and half were not, regardless of the bids. Half the participants were unexpectedly asked to rebid higher to better their odds. Again, half the bids were accepted, regardless of their bid amount. Finally, participants rated whether they would recommend PriceFine.com to others or visit it themselves.
Those who revised their bids, endured 15-minute waits or received rejections were less likely to reuse the site. While those in negotiation conditions said they would pay more than those in the ultimatum structure if they reused the site, close to 40 percent said they would not bother revisiting, compared with about 20 percent of those in the all-or-nothing condition. While the company would earn more in the short term, it would eventually lose clientele, Humphrey conjectures. "You start to see fairness makes a difference," he says.
When the rules of a game suddenly change midstream--in this case, from an all-or-nothing to a negotiation structure--people feel mistreated, Humphrey adds. He suggests that travel Web sites provide disclaimers upfront telling users how they evaluate bids.
"You want people to understand the transactions," Humphrey says. "If I know what's happening, I'm willing to pay more."
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