Marketing and Designing Transaction Games

• Authors: Steven M. Shugan
• Venue: Marketing Science
• Year: 2005

Past research reveals an extraordinary number and variety of transaction games, often with different rules. For example, buy and sell offers can be take-it-or-leave-it, irrevocable, of limited duration, negotiable, contingent on events, et cetera. The possible sets of rules seem endless. Past (often, very insightful) research has focused on optimization, given particular rules of the game. This focus often overlooks why players choose to play the game. Indeed, assuming that an exchange will occur makes the marketing function (e.g., facilitating exchanges) inconsequential. Unlike inescapable market games between rival firms, buyers and sellers often choose whether to play transaction games. Hence, game design (i.e., setting the rules of the game) becomes vital, because the design determines both the likelihood of desirable outcomes (e.g., the best transaction price) and whether (or how many) players will choose to play. We need more research revealing the desirability of various rule sets for different target groups and revealing rules that enhance the benefits to all players. For example, a particular auction game might provide sellers with liquidity (i.e., faster transactions) while providing buyers with unique items at bargain prices. We should also explore the interaction of rules and player benefits (e.g., liquidity, anonymity, likelihood of a transaction, etc.).