Product Assortment and Consumer Choice

Product Assortment and Consumer Choice PDF

Author: Alexander Chernev

Publisher: Now Pub

Published: 2012

Total Pages: 74

ISBN-13: 9781601985347

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Product Assortment and Consumer Choice: An Interdisciplinary Review examines existing literature and builds on the current theoretical developments across different research domains to develop a set of research propositions delineating the impact of product assortment on consumer choice. Taking a consumer's perspective to examine how product assortment influences decision making and choice, this monograph defines the consumer aspect of assortment research to answer three key questions. First, how do consumers perceive the variety of items in an assortment? The first part of this review examines factors that influence consumer perceptions of the variety of an assortment. In particular, it investigates how factors such as assortment size, the degree of distinctiveness of assortment options, the dispersion of option frequencies, and the organization of the assortment influence consumer perceptions of assortment variety. Second, how do consumers choose an item from a given assortment? The second part discusses factors that influence consumer choice of an item from a given assortment. It examines the impact of assortment size on the purchase likelihood from a given assortment, the number of options purchased, and the particular options chosen from the assortment. Third, how do consumers choose among assortments? The third part examines factors that influence consumer choice among assortments. In particular, it investigates how assortment size, assortment structure, and purchase quantity influence consumers' choice of an assortment. Conceptual analysis of the existing research in each of these three areas is summarized in a series of research propositions that integrate current findings and offer directions for future research. Product Assortment and Consumer Choice: An Interdisciplinary Review concludes with a discussion of the theoretical contributions and managerial implications of existing product assortment research and identify venues for further investigation.

Consumer Choice Behavior Among Wide Assortments

Consumer Choice Behavior Among Wide Assortments PDF

Author: John Timothy Gourville

Publisher:

Published: 1999

Total Pages: 20

ISBN-13:

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Manufacturers often expand product assortments in an attempt to increase brand share within a category. While the positive impact of such a strategy on brand share is not guaranteed, the rational choice principle of "regularity" dictates that a manufacturer should not lose brand share to a competitor by offering an increase in product assortment (Luce 1959). In the present research, we introduce the concept of assortment type and argue that the effect of assortment size on brand share will be moderated by assortment type. In particular, we define an "ordinal" assortment to be a set of brand variants that differ along a single continuous attribute (e.g., microwave ovens that vary on capacity) and provide evidence that increases in ordinal assortment translate to increases in brand share. In contrast, we define a "nominal" assortment to be a set of brand variants that simultaneously vary along non-comparable or discrete attributes (e.g., options on a car) and provide evidence that increases in nominal assortment can and do translate to systematic decreases in brand share.

Consumer-Driven Demand and Operations Management Models

Consumer-Driven Demand and Operations Management Models PDF

Author: Serguei Netessine

Publisher: Springer Science & Business Media

Published: 2009-06-02

Total Pages: 488

ISBN-13: 0387980261

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This important book is by top scholars in supply chain management, revenue management, and e-commerce, all of which are grounded in information technologies and consumer demand research. The book looks at new selling techniques designed to reach the consumer.

Product Assortment and Price Competition Under Multinomial Logit Demand

Product Assortment and Price Competition Under Multinomial Logit Demand PDF

Author: Omar Besbes

Publisher:

Published: 2015

Total Pages: 36

ISBN-13:

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The role of assortment planning and pricing in shaping sales and profits of retailers is well documented and studied in monopolistic settings. However, such a role remains relatively unexplored in competitive environments. In this paper, we study equilibrium behavior of competing retailers in two settings: i.) when prices are exogenously fixed, and retailers compete in assortments only; and ii.) when retailers compete jointly in assortment and prices. For this, we model consumer choice using a multinomial Logit, and assume that each retailer selects products from a predefined set, and faces a display constraint. We show that when the sets of products available to retailers do not overlap, there always exists one equilibrium that pareto-dominates all others, and that such an outcome can be reached through an iterative process of best responses. A direct corollary of our results is that competition leads a firm to offer a broader set of products compared to when it is operating as a monopolist, and to broader offerings in the market compared to a centralized planner. When some products are available to all retailers, i.e., assortments might overlap, we show that display constraints drive equilibrium existence properties.

Essays in Consumer Choice Driven Assortment Planning

Essays in Consumer Choice Driven Assortment Planning PDF

Author: Denis R. Saure

Publisher:

Published: 2011

Total Pages:

ISBN-13:

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In particular, we study competition among retailers when they have access to common products, i.e., products that are available to the competition, and where consumers have full information about the retailers' offerings. Our results shed light on equilibrium properties in such settings and the effect common products have on this behavior.

When Prospect Theory Meets Consumer Choice Models

When Prospect Theory Meets Consumer Choice Models PDF

Author: Ruxian Wang

Publisher:

Published: 2018

Total Pages: 41

ISBN-13:

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Problem Definition: Reference prices arise as price expectations against which consumers evaluate products in their purchase scenarios. We investigate what will happen when prospect theory (e.g., reference prices) meets consumer choice models from the perspectives of both the consumers and the firm.Academic/Practical Relevance: Consumers see multiple relevant products on a particular purchase occasion, and often compare their prices to form the willingness to pay when considering whether to purchase a particular product. Reference prices, which are not included in many choice models, may impact consumer choice behavior, so we incorporate reference prices into consumer choice models and investigate the operations management problems.Methodology: We take the widely used multi-nomial logit model as a showcase to examine the effects of reference prices through analytical and empirical study. We consider the optimization problems on assortment planning and pricing under consumer choice models with a variety of reference prices, including the lowest price and the assortment variety.Results: Our empirical study on a real data set demonstrates that incorporating reference prices into choice models can significantly improve goodness-of-fit and prediction accuracy of consumer choice behavior. Furthermore, we characterize the optimal policies for the assortment planning and pricing problems under the consumer choice models with various reference prices. In particular for the pricing problems under the reference prices defined by either the lowest price or assortment variety, we show that the optimal pricing policy has the following structure: products can be grouped into several categories based on their costs; the products in the same category charge either the same profit markup or the same price.Managerial Implications: In practice, reference prices should be taken into account in model estimation and operations management. Ignoring reference prices may lead to substantial losses.

The Paradox of Choice

The Paradox of Choice PDF

Author: Barry Schwartz

Publisher: Harper Collins

Published: 2009-10-13

Total Pages: 308

ISBN-13: 0061748994

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Whether we're buying a pair of jeans, ordering a cup of coffee, selecting a long-distance carrier, applying to college, choosing a doctor, or setting up a 401(k), everyday decisions—both big and small—have become increasingly complex due to the overwhelming abundance of choice with which we are presented. As Americans, we assume that more choice means better options and greater satisfaction. But beware of excessive choice: choice overload can make you question the decisions you make before you even make them, it can set you up for unrealistically high expectations, and it can make you blame yourself for any and all failures. In the long run, this can lead to decision-making paralysis, anxiety, and perpetual stress. And, in a culture that tells us that there is no excuse for falling short of perfection when your options are limitless, too much choice can lead to clinical depression. In The Paradox of Choice, Barry Schwartz explains at what point choice—the hallmark of individual freedom and self-determination that we so cherish—becomes detrimental to our psychological and emotional well-being. In accessible, engaging, and anecdotal prose, Schwartz shows how the dramatic explosion in choice—from the mundane to the profound challenges of balancing career, family, and individual needs—has paradoxically become a problem instead of a solution. Schwartz also shows how our obsession with choice encourages us to seek that which makes us feel worse. By synthesizing current research in the social sciences, Schwartz makes the counter intuitive case that eliminating choices can greatly reduce the stress, anxiety, and busyness of our lives. He offers eleven practical steps on how to limit choices to a manageable number, have the discipline to focus on those that are important and ignore the rest, and ultimately derive greater satisfaction from the choices you have to make.

The Impact of Consumer Search Cost on Assortment Planning and Pricing

The Impact of Consumer Search Cost on Assortment Planning and Pricing PDF

Author: Ruxian Wang

Publisher:

Published: 2017

Total Pages: 49

ISBN-13:

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Consumers search for product information to resolve valuation uncertainties before purchase. We incorporate search cost into consumer choice models and study the two-stage consider-then-choose policy. In the first stage, a consumer forms her consideration set by balancing utility uncertainty and search cost; in the second stage, she evaluates all products in her consideration set and chooses the one with the highest net utility. We show that the revenue-ordered assortment (i.e., the offer set that includes products in the revenue-decreasing order) fails to be optimal, although it can obtain at least half the optimal revenue. We propose a k-quasi attractiveness-ordered assortment and show that it can be arbitrarily near-optimal for the market share maximization problem. The assortment problems with search cost are generally NP-hard, so we develop efficient approximation or relatively fast exact algorithms for a variety of assortment problems under the consider-then-choose models with search cost. For the joint assortment planning and pricing problem with homogeneous consumers, we show that the intrinsic-utility-ordered assortment and the quasi-same-price policy, which charges the same price for all products except at most one, are optimal.

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