The Impact of Mobile Data Cost on Consumer Price Sensitivity: A Study of a Hotel Booking App

The Impact of Mobile Data Cost on Consumer Price Sensitivity: A Study of a Hotel Booking App Mobile data cost arises from the perception that mobile data are more expensive than Wi-Fi because of additional charges incurred when exceeding fixed data quotas. Understanding mobile data cost is a global and industry-wide concern as the perception of this cost is common in both developed and developing countries, and even subtle behavioral shifts because of this cost can have significant impacts given the prevalence of mobile shopping. Using hotel search data, we find that consumers are approximately twice as price sensitive when using mobile data compared with Wi-Fi, leading to an average revenue reduction of $17 per hotel booking. Additionally, consumer search effort decreases across decision stages when using mobile data rather than Wi-Fi, showing that mobile data users pursue satisfactory options without extensive search effort, obtain less product information, and therefore rely more on price information, becoming more price sensitive. This study provides implications for mobile shopping environments in which limited mobile data plans are common, suggesting that firms should consider consumers’ connectivity types in marketing strategies, offer data subsidies to encourage more thorough searches, and develop customized recommendations and app versions for mobile data users and that policymakers should monitor potential price discrimination to protect consumer interests.