Perceptions of assortment variety: The effects of congruency between consumers’ internal and retailers’ external organization

This research shows that consumers’ perceptions of variety and satisfaction are dependent upon how the assortment is organized, both internally by the consumer and externally by the retailer. The results of three laboratory studies indicate that for familiar categories, congruency between a consumer's internal categorization structure and the external store layout leads to higher perceptions of variety and higher satisfaction with product choices, while for unfamiliar product categories, congruency between shopping goals and external structure leads to lower perceptions of variety but increased satisfaction with the store's assortment. However, if retailers institute external category filters congruent with consumers’ internal shopping goals that allow them to bypass products, consumers have both lower variety perceptions and satisfaction with the assortment offering.     

Dynamic assortment in the presence of brand heterogeneity

In this paper, we study the dynamic assortment planning problem in the presence of heterogeneous brands. Over a limited selling season, the retailer sells heterogeneous products from one store brand and one national brand. We use the nested multinomial logit (NMNL) framework to model consumer choice process, in which consumers choose first which brand to buy and then a product within that brand. We formulate this problem using the finite-horizon dynamic programming approach. Using available sales transaction data, we estimate the consumer choice behavior and empirically demonstrate existence of brand heterogeneity. Further, our results suggest that ignoring brand heterogeneity will make the retailer’s expected revenues significantly overestimated, and the potential revenue overestimation depends on initial inventories and prices of products of two brands. We finally show that the retailer will benefit from dynamic assortment optimization with the estimated consumer choice model.     

The fight between store brands and national brands—What's the score?

In the Western world market shares for store brands have increased across all product categories. The competitive position of store brands compared to national brands may depend on the product category and a retail chain's overall brand assortment strategy. In order to investigate these possible chain and category effects we have selected five chains with different store brand strategies and three product categories that differ with respect to the number of strong national brands in a category. The results we report focus on the competitive position of store brands compared to national brands from a consumer point of view. We find that store brands are in a weak competitive position compared to national brands independent of category and retail chain brand assortment strategy.     

Are Consumers Really Bewildered by Overchoice? An Experimental Approach to the Tyranny of “Too Much”

Conventional wisdom advocates that consumers love choice. But just how much? This study delves into this subject by considering the cognitive factors that underpin the consumer’s reaction to plentiful assortment on the shelf, but which may cause “analysis paralysis” and indecision. In an attempt to investigate the above, this study adopts an experimental approach to ascertain what occurs when consumers are faced with a multitude of options within the product category of red wine. The results suggest that if executed correctly, retailers can effectively reduce assortment in such a manner that does not negatively impact perceptions of choice, but does indeed reduce the cost incurred when consumers are forced to weigh up options against each other. Of particular interest, the study finds that product knowledge and experience also has a material effect on the outcome of these endeavors. Hence, both product category familiarity and the nature of the consumer should be factored into the strategic thinking of how a retailer can optimize the merchandise assortment displayed to the customer.     

The effect of retail assortment size on perceptions,choice, and sales: Review and research directions

We perform a meta-analytic review of the effect of retail assortment size on consumer perceptions, choice, and retail sales/share using a database comprising of 177 studies obtained from 95 academic papers published during 1970–2021. We define assortment size broadly as the total number of distinct alternatives (options) available to the consumer when he/she makes a choice in a product category. This number of alternatives manifest in the form of a number of brands, number of stock-keeping-units (SKUs), or simply number of items such as different colors or packaging. An increase in assortment size can lead to beneficial effects such as assortment preference, perceived choice satisfaction, confidence, freedom, purchase incidence, sales, and profits, as well as negative consequences such as information overload, increased cognitive effort, choice uncertainty, choice difficulty, and hence choice avoidance. Numerous researchers have reported the effect of assortment size on one or more of these factors. We summarize these effects using a metric called assortment size (net) benefit elasticity by positively valuing the beneficial effects and negatively valuing the harmful effects. Assortment size benefit elasticity is defined as the percent change in net benefit for a 1% change in assortment size. Our meta-analysis reveals that the mean assortment size benefit elasticity across 1936 valid elasticity observations is .082, and this effect is moderated by many study design and environmental factors. We also explore nonlinearity in assortment size effect and whether the effect is different for online vs. offline purchasing. Based on these findings, we list 30 characteristics conducive for assortment addition/deletion and specify several directions for future research.     

Category management,product assortment,and consumer welfare

In this article, we endogenize product assortment decisions under a category management (CM) framework in a channel setup. We find that (1) product assortment is polarized more under CM than under a non-CM regime; (2) the price of a high-end (low-end) product in an assortment increases (decreases) under CM than under a non-CM regime; and (3) a high-quality manufacturer makes more profit than a low-quality manufacturer. In our model, the manufacturer’s choice of quality and its polarization is driven by the existence and the decisions of the retailer (CM or non-CM). Finally, we have an interesting result on consumer welfare. We find that the total consumer welfare, as measured by consumer surplus, worsens under CM only when there is sufficient heterogeneity in consumers’ tastes.     

The effect of item reduction on assortment satisfaction—A consideration of the category of red wine in a controlled retail setting

This study aims to investigate the effect of item reduction on assortment satisfaction within the red wine category. The study conducted an online experiment using a simulated online wine store. Lowest selling wines were removed after the first buying phase, and the respondents repeated the browsing process in the reduced assortment. A questionnaire measured the shift in perceptions. The results show that assortment perceptions can be maintained in the face of item reduction. There is also a strong association between category familiarity and assortment satisfaction, with differing levels of assortment satisfaction between high and low category familiarity groups. The presence of a favourite item also plays a role in maintaining assortment perceptions. The results suggest that retail managers can reduce assortments by removing low selling items while not affecting customers' assortment perceptions. Furthermore item reduction can be used to increase consumers' satisfaction if they are unfamiliar with the product category. This particular study is limited in the sense that the results were obtained exclusively in an online environment. Future studies may therefore be useful in validating these results in brick and mortar wine outlets.     

UK mid-market department stores: Is fashion product assortment one key to regaining competitive advantage?

This paper investigates consumer's attitudes towards fashion product assortment in UK mid-market department stores. It aims to determine whether changes to assortment will increase purchase intention and help regain competitive advantage through aligning customer perceptions of product quality and fit with brand image. Our findings challenge the traditional role of the department store in curating fashion assortment. We find that increases in perceived quality, perceptions of brand portfolio and brand fit will increase the purchase intention of UK mid-market department store consumers, whilst reduced assortment sizes would lead to a decrease in purchase intent.     

Retailers’ Merchandise Organization and Price Perceptions

Retailers’ presentation of merchandise to consumers is often organized by brand or by price to facilitate comparison and processing of competitive information. While such organization of product information is presumed to assist consumer decision-making, we suggest that sorting of alternatives on brand names strain cognitive resources more than a price sort, leading to differences in sensitivity to prices for a target product accompanying these two sorts. We conduct three studies to examine this issue and find that sorting of alternatives interacts with consumers’ motivation and influences price perceptions. Our results add nuance to the findings from previous studies examining how assortment affects consumers’ price sensitivity, and suggest that retailers whose appeal is not primarily price-based could benefit by presenting merchandise information sorted by brand name so as to increase perceptions of quality and value.     

The effect of shelf layout on satisfaction and perceived assortment size: An empirical assessment

This research compares the effect of different shelf visual layouts on decision satisfaction and perceptions of the retailer assortment, with a focus on how (e.g. vertically vs. horizontally) to display products rather than on how many products to display. The combined evidence from three experimental studies shows that displaying assortment breadth horizontally and depth vertically led participants to perceive a larger selection and to be more satisfied. Furthermore, linear displays increase decision satisfaction but decrease perceived assortment size and preference strength for the top brand, whereas visual layouts with the preferred brand in the central position increase decision satisfaction, make the assortment appear larger, and enhance preference strength for the top brand. The findings provide guidelines about how to organize products on the shelves and suggest that – even when actual assortment size is constant – consumer responses to the assortment depend from how the retailer displays the products.     

Antecedents of Green Brand Equity: An Integrated Approach

A steady demand for green products from concerned consumers has led companies to introduce new product lines that match or exceed consumer environmental concerns. Nonetheless, not all the organizations were able to achieve significant returns on their investments in green products. These failures are generally attributed towards companies’ inability to overcome consumer scepticism towards the performance of functional and green attributes of their brands to generate a positive green image and green value in consumers mind. Therefore, the question arises that does the success in promoting green brand image and value depend on consumer existing perceptions about the brand quality and credibility? This study analyzes the influence of brand perceive quality and credibility on consumer perceptions towards a brand green image, green value and green equity. A theoretical model with hypothesized relationships is developed and tested to answer these research questions. Data have been collected from the consumers of electrical and electronic goods. The hypothesized relationships were tested with the help of structural equation modeling procedure. The results suggest that brand perceived quality and its overall credibility does have a significant influence on generating a greener image, green perceive value and green brand equity.     

A Micromodel of New Product Adoption with Heterogeneous and Forward-Looking Consumers: Application to the Digital Camera Category

We develop an empirical model for the adoption process of a new durable product that accounts for consumer heterogeneity as well as consumers forward-looking behavior. Accounting for heterogeneity is important for two reasons. As the mix of consumers with different preferences and price sensitivities could change over time, firms need to update their marketing strategies. Further, it allows for a variety of shapes for the aggregate adoption process over time. As prices for durable and technology products fall over time with firms continually introducing enhanced products, consumers may anticipate these prices and improvements and delay their purchases in the product category. Forward-looking consumers optimize purchase timing by trading off their utilities from buying the product and their expectations on future prices, quality levels, and brand availability. Such forward-looking behavior will result in price dynamics in the marketplace as price changes today influence future purchases. And it results in different shapes of the new product sales pattern over time by influencing the time to take-off. We show how the parameters of our model can be estimated using aggregate data on the sales, prices, and attributes of brands in a product category. We apply our model to market data from the digital camera category. Our data are consistent with the presence of both heterogeneity and forward looking behavior among consumers. At the product category level, we are able to decompose the effects of the entry of Sony into primary demand expansion and switching from other brands. At the brand level, we find that there exist several segments in the market with different preferences for the brands and different price sensitivities leading to differences in adoption timing and brand choice across segments. For a given brand, we show how the changing customer mix over time has implications for that brands pricing strategies. We characterize how price effects vary across brands and over time and how price changes in a given time period influence sales in subsequent periods. Model comparison and validation results are also provided.     

Effects of prior brand usage and promotion on consumer promotional response

We examine how prior purchases influence consumer response to promotional activity in brand choice decisions. To improve understanding of the nature of this influence, we separate previous purchases into those on promotion and those not on promotion, and consider their differential impact on subsequent brand choices. Impact may be observed at the brand level, category level, or both and we suggest circumstances in which each might occur. Across four product categories, consumer sensitivity to price, price promotions, and feature advertisements increases for all brands in the product category following a promotional purchase but also decreases for the most recently purchased brand. The magnitudes of the results indicate that prior promotional purchases influence choice more than prior brand usage does. We offer managerial recommendations regarding promotional activities, for both retailers and manufacturers.     

Brand Equity, Consumer Learning and Choice

The aim of this paper is to explore the links between brand equity, consumer learning and consumer choice processes in general and considering two recent trends in the market place: store brands and the Internet. We first review the advances that have occurred in brand equity research in marketing in the past decade, with particular emphasis on integrating the separate streams of research emanating from cognitive psychology and information economics. Brand equity has generally been defined as the incremental utility with which a brand endows a product, compared to its non-branded counterpart. We amplify this definition: we propose that brand equity be the incremental effect of the brand on all aspects of the consumer's evaluation and choice process. We propose an agenda of research based on this amplified definition.     

Organizing Products with Complements versus Substitutes: Effects on Store Preferences as a Function of Effort and Assortment Perceptions

Retailers often organize at least part of their assortment by displaying complementary products from different product categories together (e.g., a pair of pants with a shirt) rather than grouping items by product type (e.g., a pair of pants with other pants). However, little is known about how retailers should choose between complement-based and substitute-based organizations. The present paper shows that consumers’ preferences for such store organizations are a function of the effort and assortment perceptions cued by these organizational formats. Holding the underlying assortment constant, complement-based organizations are always more effortful than substitute-based organizations. This difference in effort can create downward pressure on complement-based store choice. Moreover, the effects of organization format on assortment perception depend on whether consumers hold a hedonic or utilitarian focus. When consumers have a highly hedonic focus, complement-based based stores create more positive assortment perceptions than substitute-based stores. Such positive assortment perceptions can, in turn, raise complement-based store choice. However, as consumers’ utilitarian focus increases, substitute-based assortments are seen as both easier and more attractive, leading to a strong advantage in store choice. Our findings provide actionable guidance for retailers considering various store organizations and suggest opportunities for future research.     

A brand preference and repurchase intention model: the role of consumer experience

Consumer brand preference is an essential step towards understanding consumer choice behaviour, and has therefore always received great attention from marketers. However, the study of brand preference has been limited to traditional marketing focusing on functional attributes to maximise utility. But now the shift to experiential marketing broadens the role of the brand from a bundle of attributes to experiences. Technological advancements have helped to increase the similarities between brand attributes and product commoditisation. Consequently, consumers cannot shape their preferences among brands using rational attributes only. They seek out brands that create experiences; that intrigue them in a sensorial, emotional and creative way. This study seeks to develop a model that provides an understanding of how brand knowledge and brand experience determine brand preference and to investigate its impact on brand repurchase intention. Accordingly, exploratory focus group discussions are employed followed by a survey of mobile phone users in Egypt. The findings provide insights into the relative importance of consumer perceptions on different brand knowledge factors in shaping brand preferences. It also demonstrates the significance of consumers’ experiential responses towards brands in developing their brand preferences that in turn influence brand repurchase intention. The model therefore offers managers a new perspective for building strong brands able to gain consumer preferences.     

The dark side of innovation: How new SKUs affect brand choice in the presence of consumer uncertainty and learning

New product activity is critical for sustained success of consumer packaged goods (CPG) brands. However, the impact of new SKUs on the perceived quality, quality uncertainty and subsequent choice of the brand as a whole is, as of yet, not well understood. The authors study how new additions to the brand line shape consumers’ quality perceptions, and how this – next to the mere line length effect – influences their choice of brands over time. They do so in the setting of an emerging market (China), where new product activity is particularly pervasive. Using a unique scanner panel dataset of Chinese households over the period 2011–2014, they estimate a Bayesian learning model that accommodates varying quality, on two CPG categories, and for two types of new-product additions (new sensory SKUs vs. new non-sensory SKUs). They show that while adding new SKUs may lift the brand’s perceived quality level, it also makes consumers more uncertain about the quality of the brand – dampening their brand choice. This holds especially for light customers – an important part of the brand clientele. Managerial implications are discussed.     

Store Brand Quality and Retailer’s Product Line Design

This study analyzes a retailer’s store brand quality decision in vertically differentiated product categories. We analyze a game theoretic model composed of one or two national brand manufacturers and a retailer, who strategically chooses the quality level(s) of its store brand(s) relative to the well-established national brand position(s) to maximize its category profit. Our analysis reveals that the nature of a retailer’s store brand quality positioning is quite different from the manufacturer’s national brand positioning decision, and that the best position for a store brand is not “as close to a national brand as possible” as previous studies suggest. Instead, the optimal quality position of each store brand is remarkably sensitive to the distribution of consumers’ willingness-to-pay. In particular, the relative proportions of quality sensitive consumers and price sensitive consumers determine the balance of three key strategic forces — the market expansion force, the retail margin force, and the consumer profitability force, leading to different optimal product line designs for store brands across different category environments. Interestingly, against multiple incumbent national brands, the retailer’s optimal product line design includes a store brand positioned at the highest quality level in the category only if most consumers are moderately quality conscious. We also analyze the implications of national brands’ brand equity for retailers’ store brand strategy.     

Consumer perceptions of third party product quality ratings

Consumers increasingly rely on product quality information provided by third-party product ratings organizations. These organizations undertake the task of examining and testing competing products in the marketplace, establishing the level of quality associated with each product, and communicating this information to consumers. Despite the important role of product quality ratings in consumer decisions little research has been conducted to establish the factors which may influence consumer perceptions of these ratings. This paper examines the role of the information content provided by product quality ratings organizations on consumer perceptions. Furthermore, the influence of contextual variables, namely information cost, product category and advertising content, is examined. The results indicate that both content and context significantly influence consumer perceptions of source credibility and their intentions to use the product quality ratings in their purchase decisions.     

The competing roles of variety seeking in new brand adoption

We examine how consumers' attribute-level variety-seeking behaviors can explain their propensity to adopt a new brand in the consumer packaged goods (CPG) market. We leverage consumers' purchase history among extant brands prior to a new brand introduction as an indicator of the new brand adoption upon its launch. We incorporate variety seeking at two product attribute levels – brand and flavor – and find that variety seeking along these two dimensions predicts different outcomes for new brand adoptions. The estimation results of our discrete-time hazard model show that consumers' brand-level and flavor-level variety-seeking behaviors affect their likelihood to adopt a new brand in different manners: consumers who purchase various brands are more likely to adopt a new brand, whereas those who choose various flavors are less likely to adopt a new brand. The results also show that the new brand's price promotions and in-store displays can affect the role of variety seeking in consumers' new brand adoption. We assess the robustness of our findings by replicating our empirical model with an additional measure of variety seeking as well as a variety-seeking measure in another product category.