Using Visual Design to Improve Customer Perceptions of Online Assortments

In the future, we expect to see more shopping on-line or on smart phones. This suggests that understanding how visual design decisions can influence consumers’ reactions to online assortments is important. New advances in neuro-marketing techniques, such as sophisticated eye tracking methodology, can help understand exactly what drives consumers’ attention and processing efficiency.Visual stimuli on small screens is frequently processed very quickly leading to perceptions that form automatically often without cognitive intervention. Thus, savvy retailers should strategically use design elements of the assortments and of packaging to direct attention and increase the ease of processing. Assortments that are easier to process are liked more and are judged to have more perceived variety. Complexity must be minimized so that assortments can be parsed immediately. Categorization, organizational structure, filtering and other design elements can also help with choice overload.     

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.     

Beyond plain vanilla: Modeling joint product assortment and pricing decisions

This paper investigates empirically the product assortment strategies of oligopolistic firms. We develop a framework that integrates product choice and price competition in a differentiated product market. The present model significantly improves upon the reduced-form profit functions typically used in the entry and location choice literature, because the variable profits that enter the product-choice decision are derived from a structural model of demand and price competition. Given the heterogeneity in consumers’ product valuations and responses to price changes, this is a critical element in the analysis of product assortment decisions. Relative to the literature on structural demand models, our results show that incorporating endogenous product choice is essential for policy simulations and may entail very different conclusions from settings where product assortment choices are held fixed.

Why is Assortment Planning so Difficult for Retailers? A Framework and Research Agenda

When retailers conduct product assortment planning (PAP), they determine (1) The variety of merchandise, (2) The depth of merchandise, and (3) Service level or the amount of inventory to allocate to each stock-keeping unit (SKU). Despite longstanding recognition of its importance, no dominant PAP solution exists, and theoretical and decision support models address only some of the factors that complicate assortment planning. This article simultaneously addresses the variety, depth, and service level aspects of PAP to provide a more thorough understanding. A review of current academic literature and best trade practices identifies open questions and directions for further research and applications.     

Information and its impact on consumers׳ reactions to restrictive return policies

Designing an effective return policy is a difficult task for retailers. A very restrictive return policy can keep logistic costs down and prevent fraudulent returns but it can also have a negative effect on consumer behavior. Two experiments explore the role of assortment-related information in moderating consumers׳ negative reactions to more restrictive product return policies. The results demonstrate that consumers will view an assortment characterized by a more restrictive return policy as attractive to the extent that the assortment supports the information processing strategy triggered by the return policy.     

Diminishing varieties of active and creative retail experience: The end of the music shop?

In qualitatively defining the spatial attractions of music shops for a group of highly involved and long-term consumers, the elaborated consumption event implies a socially and culturally relevant creative retail process. This takes the form of an immersive interpretation and investigation of aspects of music store space design and merchandise relevant to the exploration and construction of meaningful, personal mythologies in a self-developmental, transactional event whilst being out ‘in-the-world’. Supporting this event were deep levels of product involvement, with inter- and intra-personal communication in a supporting space relating to a set of community values, particularly encoded in 12” vinyl artefacts.     

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.     

Too many cooks spoil the broth? Number of promotional gifts and impact on consumer choice

As an alternative to traditional free-gift promotions where consumers have little say over which gift item they receive, retailers are increasingly offering consumers an option to choose from a menu of free-gift items (e.g., buy a washing machine and pick a steam iron or a vacuum cleaner for free). However, little is known about what drives consumers' perceptions of value associated with a menu of free-gift items. Using data from a unique retail-promotion setting and controlled-lab studies, we show that the perceived attractiveness of free-gifts follows an inverted U-shape (or plateauing-shape) as the ‘menu-size’ increases. We also highlight the interplay of resource (time and money) constraints experienced by consumers and menu-size on the proposed effects. Our findings not only help retailers better design free-gift promotions but also contribute to the academic conversations in the domain of promotional-gifts by exploring the downstream consequences of offering choices in a promotional-gift context.     

On the Go: How Mobile Shopping Affects Customer Purchase Behavior

Mobile shopping (M-shopping) has become increasingly important in marketing and retailing. Using a unique dataset from an Internet-based grocery retailer, we evaluate changes in customers’ spending behavior upon adopting M-shopping, i.e., using smartphones or tablets to compose, modify, or place orders online. We find that order rate, i.e., number of orders placed per year, increases as customers adopt M-shopping. Especially for low-spending customers, both their order rate and order size, i.e., the amount of the order in dollars, increase as they become accustomed to M-shopping. In addition to the effect on customer's spending behavior, we also find that M-shoppers tend to use mobile devices to shop for habitual products that they already have a history of purchasing. We propose that customers utilize mobile devices because the technology provides convenient access, which leads them to incorporate M-shopping into their habitual routines. Managerially, we recommend that firms should fully leverage their mobile platforms, but they should also keep in mind that mobile devices may not be the most optimal channel for launching new products or promoting products that require more consideration during the buying process.