| Abstract |
This study aims to develop a framework for format decisions using transactional utility theory. It would determine the effects of economic, value i.e. costs and price, as well as the effects of interaction with non-price variables such as ambience and service. The study proposes the following hypotheses:
• As the acquisition utility sought by shoppers increases, importance of the formats would decrease. Thus in a situation where p > q, a retailer may have to focus more on variables that would increase the economic value of shopping.
• As the transaction utility sought by shoppers increases, importance of format selection increases. Therefore, in a situation where p > q, a retailer would need to pay attention more to the variables that are present in the store, visible as well as invisible.
• In selecting a format, a shopper would optimize the value derived out of shopping by trading off between acquisition and transaction utilities.
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