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Overchoice and Assortment Type: When and Why Variety Backfires
Abstract
Almost universally, research and practice suggest that a brand that increases its product assortment, or variety, should benefit through increased market share. In this paper, we show this is not always the case. We introduce the construct “assortment type” and demonstrate that the effect of assortment size on brand share is systematically moderated by assortment type. We define an “alignable” assortment as a set of brand variants that differ along a single, compensatory dimension such that choosing from that assortment only requires within-attribute trade-offs. In contrast, we define a “nonalignable” assortment as a set of brand variants that simultaneously vary along multiple, noncompensatory dimensions, demanding between-attribute trade-offs. In turn, we argue that an alignable assortment can efficiently meet the diverse tastes of consumers, thereby increasing brand share, but that a nonalignable assortment increases both the cognitive effort and the potential for regret faced by a consumer, thereby decreasing brand share. We term this effect “overchoice.”
Across three studies, we provide evidence of overchoice and tie the effect to the effort and regret brought about by nonalignability. In the process, we demonstrate that simplification of information presentation, reversibility of choice, and a reduction in underlying nonalignability serve to reduce or eliminate this effect.
... Park & Kang, 2022;Sthapit, 2018;Thai & Yuksel, 2017b;Warren & Lupinek, 2019 Hotel/Tourism Products Chen & Yang, 2020;Hu et al., 2023;Nagar, 2016a;Nagar & Gandotra, 2016;Tung et al., 2019;Turri & Watson, 2023 Online shopping D' Angelo & Toma, 2017;Pronk & Denissen, 2020;Thomas et al., 2022 Online dating Haynes, 2009;Reutskaja & Hogarth, 2009;Scheibehenne et al., 2009a Promotional Offers Kim et al., 2023 Chat-GPT recommendations E. Y. Chan, 2015Documentaries Jilke et al., 2016 Electricity providers Hwang et al., 2023 Fast fashion stores Gourville et al.,205 Microwave oven, Camera, Golf balls Chernev & Hamilton, 2009Retailers Hafner et al., 2012Huff & Johnson, 2014b Stationary Hadar & Sood, 2014b;Haynes, 2009;Misuraca et al., 2019;J. Y. Park & Jang, 2013;Schaefers et al., 2023;Scheibehenne et al., 2009aScheibehenne et al., , 2010Thai & Yuksel, 2017b Option categorization/filtering (Denizci Guillet et al., 2020;Guo & Li, 2022;Kathrin et al., n.d.;Kim et al., 2023;Scheibehenne et al., 2010a;Turri & Watson, 2023) Perceived Variety Gourville et al., 2005;Greenwood & Ramjaun, 2020;Nagar, 2016a Option Attractiveness E. Y. Chan, 2015b;Chernev & Hamilton, 2009;Misuraca et al., 2021 Time factor Chernev, 2003;Greenwood & Ramjaun, 2020;S. Park & Kang, 2022 Prior preference Gourville et al., 2005) Brand Misuraca et al., 2019Misuraca et al., , 2021 Recommender systems Kim et al., 2023 Decision focus Chernev, 2006 Satisfaction/Regret Chernev, 2003;D'Angelo & Toma, 2017;Huff & Johnson, 2014b;Iyengar & Lepper, 2000b;Misuraca et al., 2019Misuraca et al., , 2021S. ...
... Y. Park & Jang, 2013;Schaefers et al., 2023;Scheibehenne et al., 2009aScheibehenne et al., , 2010Thai & Yuksel, 2017b Option categorization/filtering (Denizci Guillet et al., 2020;Guo & Li, 2022;Kathrin et al., n.d.;Kim et al., 2023;Scheibehenne et al., 2010a;Turri & Watson, 2023) Perceived Variety Gourville et al., 2005;Greenwood & Ramjaun, 2020;Nagar, 2016a Option Attractiveness E. Y. Chan, 2015b;Chernev & Hamilton, 2009;Misuraca et al., 2021 Time factor Chernev, 2003;Greenwood & Ramjaun, 2020;S. Park & Kang, 2022 Prior preference Gourville et al., 2005) Brand Misuraca et al., 2019Misuraca et al., , 2021 Recommender systems Kim et al., 2023 Decision focus Chernev, 2006 Satisfaction/Regret Chernev, 2003;D'Angelo & Toma, 2017;Huff & Johnson, 2014b;Iyengar & Lepper, 2000b;Misuraca et al., 2019Misuraca et al., , 2021S. Park & Kang, 2022;Pronk & Denissen, 2020;Reutskaja & Hogarth, 2009;Scheibehenne et al., 2010;Sthapit, 2018;Thai & Yuksel, 2017b;Tung et al., 2019;Turri & Watson, 2023;Warren & Lupinek, 2019 Decision Difficulty Hwang et al., 2023;Kim et al., 2023;Misuraca et al., 2019Misuraca et al., , 2021Warren & Lupinek, 2019) Purchase behaviour Hadar & Sood, 2014b;Iyengar & Lepper, 2000a;Warren & Lupinek, 2019 Switching behavior Chernev et al., 2015;Huff & Johnson, 2014b;Jilke et al., 2016;Sharma & Nair, 2017) Choice decision/Selection Chernev, 2006;Chernev et al., 2015;Gourville et al., 2005;Greenwood & Ramjaun, 2020;Haynes, 2009b; J. Y. Park & Jang, 2013b;Scheibehenne et al., 2009a Rejection mindset Chernev et al., 2015;Greenwood & Ramjaun, 2020) Choice deferral Chernev et al., 2015;Greenwood & Ramjaun, 2020 Clickthrough Huff & Johnson, 2014b Outcomes Decision Confidence Chernev et al., 2015;Denizci Guillet et al., 2020;Greenwood & Ramjaun, 2020;Misuraca et al., 2019;Schaefers et al., 2023 Against Besedes et al., 2014;Kim et al., 2023;Misuraca et al., 2019Misuraca et al., , 2021Scheibehenne et al., 2009bScheibehenne et al., , 2010bSthapit, 2018) Evidences For Almost all, except those mentioned in 'Against' ...
... Park & Kang, 2022 Prior preference Gourville et al., 2005) Brand Misuraca et al., 2019Misuraca et al., , 2021 Recommender systems Kim et al., 2023 Decision focus Chernev, 2006 Satisfaction/Regret Chernev, 2003;D'Angelo & Toma, 2017;Huff & Johnson, 2014b;Iyengar & Lepper, 2000b;Misuraca et al., 2019Misuraca et al., , 2021S. Park & Kang, 2022;Pronk & Denissen, 2020;Reutskaja & Hogarth, 2009;Scheibehenne et al., 2010;Sthapit, 2018;Thai & Yuksel, 2017b;Tung et al., 2019;Turri & Watson, 2023;Warren & Lupinek, 2019 Decision Difficulty Hwang et al., 2023;Kim et al., 2023;Misuraca et al., 2019Misuraca et al., , 2021Warren & Lupinek, 2019) Purchase behaviour Hadar & Sood, 2014b;Iyengar & Lepper, 2000a;Warren & Lupinek, 2019 Switching behavior Chernev et al., 2015;Huff & Johnson, 2014b;Jilke et al., 2016;Sharma & Nair, 2017) Choice decision/Selection Chernev, 2006;Chernev et al., 2015;Gourville et al., 2005;Greenwood & Ramjaun, 2020;Haynes, 2009b; J. Y. Park & Jang, 2013b;Scheibehenne et al., 2009a Rejection mindset Chernev et al., 2015;Greenwood & Ramjaun, 2020) Choice deferral Chernev et al., 2015;Greenwood & Ramjaun, 2020 Clickthrough Huff & Johnson, 2014b Outcomes Decision Confidence Chernev et al., 2015;Denizci Guillet et al., 2020;Greenwood & Ramjaun, 2020;Misuraca et al., 2019;Schaefers et al., 2023 Against Besedes et al., 2014;Kim et al., 2023;Misuraca et al., 2019Misuraca et al., , 2021Scheibehenne et al., 2009bScheibehenne et al., , 2010bSthapit, 2018) Evidences For Almost all, except those mentioned in 'Against' ...
Purpose
This study, a systematic literature review, aims to review the state-of-the-art literature on choice overload from 2000 to 2023.
Design/methodology/approach
The paper reviews 53 research articles published in peer-reviewed journals, using thematic and descriptive analyses. The literature was selected using the PRISMA framework.
Findings
Recent research in consumer behaviour has found that too many choices can be detrimental to decision-making. This paper reviews the development of choice overload literature, methodologies used by researchers to study choice overload, small and large choice sets, antecedents, moderators and outcomes of choice overload and the contexts in which choice overload exists.
Research limitations/implications
Limited literature coverage because of the strict adherence to inclusion/exclusion criteria. The theory challenges the conventional choice models in psychology and economics according to which expanding a choice set cannot make decision-making worse and violates the regularity axiom, a cornerstone of classical choice theory. This review also identifies avenues for further research in the field.
Practical implications
A significant decrease in satisfaction or motivation because of too many choices would require marketers and public policymakers to rethink their practice of providing ever-increasing assortments to choose from because they could possibly boost their success by offering less.
Originality/value
This systematic review makes distinctive contributions by classifying the existing studies based on evidence “for” and “against” the existence of choice overload. The review also combines cross-context insights on assortment sizes, moderators and methodological commonalities and gaps to understand the multi-faceted nature and contextual nuances of choice overload.
... When unique attributes of options exist within a choice set, complexity and choice overload increase as the unique attributes make comparison more difficult and trade-offs more salient. Indeed, feature alignability and complementarity (meaning that the options have additive utility and need to be co-present to fully satisfy the decision-maker's need) 1 have been associated with decision deferral (Chernev, 2005;Gourville and Soman, 2005) and changes in satisfaction (Griffin and Broniarczyk, 2010). ...
... When individuals have decision accountability or are required to justify their choice of an assortment to others, they tend to prefer larger assortments; However, when individuals must justify their particular choice from an assortment to others, they tend to prefer smaller choice sets (Ratner and Kahn, 2002;Chernev, 2006;Scheibehenne et al., 2009). Indeed, decision accountability is associated with decision deferral when choice sets are larger compared to smaller (Gourville and Soman, 2005). Thus, decision accountability influences decision task difficulty differently depending on whether an individual is selecting an assortment or choosing an option from an assortment. ...
... This could be associated with decision-making tendencies. Indeed, adults and adolescents tend to adopt maximizing approaches (Furby and Beyth-Marom, 1992). This maximizing tendency aligns with their greater perceived difficulty and post-choice dissatisfaction when facing a high number of options . ...
Researchers investigating the psychological effects of choice have provided extensive empirical evidence that having choice comes with many advantages, including better performance, more motivation, and greater life satisfaction and disadvantages, such as avoidance of decisions and regret. When the decision task difficulty exceeds the natural cognitive resources of human mind, the possibility to choose becomes more a source of unhappiness and dissatisfaction than an opportunity for a greater well-being, a phenomenon referred to as choice overload. More recently, internal and external moderators that impact when choice overload occurs have been identified. This paper reviews seminal research on the advantages and disadvantages of choice and provides a systematic qualitative review of the research examining moderators of choice overload, laying out multiple critical paths forward for needed research in this area. We organize this literature review using two categories of moderators: the choice environment or context of the decision as well as the decision-maker characteristics.
... To our knowledge, there is no prior work that empirically studies how heterogeneity among agents impacts the number of matches in an online marketplace. Studying very different contexts from ours, such as retail groceries, electronics stores, and cellular phone markets, the existing literature suggests that increased variety or heterogeneity among options in an assortment can be detrimental to a consumer's choice decision, i.e., consumer's likelihood of making a choice among offered alternatives (Iyengar and Lepper 2000, Gourville and Soman 2005, Heitmann et al. 2007, Huber et al. 2012, Nagar and Gandotra 2016. For instance, Gourville and Soman (2005) empirically study the effect of assortment variety on consumer brand choice, and demonstrate that a highly diverse assortment negatively impacts a customer's likelihood of a purchase regardless of the assortment size. ...
... Studying very different contexts from ours, such as retail groceries, electronics stores, and cellular phone markets, the existing literature suggests that increased variety or heterogeneity among options in an assortment can be detrimental to a consumer's choice decision, i.e., consumer's likelihood of making a choice among offered alternatives (Iyengar and Lepper 2000, Gourville and Soman 2005, Heitmann et al. 2007, Huber et al. 2012, Nagar and Gandotra 2016. For instance, Gourville and Soman (2005) empirically study the effect of assortment variety on consumer brand choice, and demonstrate that a highly diverse assortment negatively impacts a customer's likelihood of a purchase regardless of the assortment size. We refer readers to Kahn et al. (2013) for an extensive literature review on how high variety of options in an assortment can negatively impact consumers' decision-making processes. ...
... Any negative impact of heterogeneous options on customer choice plausibly gets more pronounced when assortment size increases. In fact, Gourville and Soman (2005) provide evidence for this. The authors investigate whether customers face elevated conflicts in their choices as the size of a heterogeneous assortment expands. ...
... Choice overload occurs when an individual's cognitive resources cannot handle the complexity of a decision problem due to the overwhelming number of options they must consider (Haghpour et al., 2022). This phenomenon has been referred to as choice overload (Diehl & Poynor, 2010;Iyengar & Lepper, 2000;Mogilner et al., 2008), over choice effect (Gourville & Soman, 2005), the problem of too much choice (Fasolo et al., 2007), the tyranny of choice (Fasolo et al., 2007;Schwartz, 2000), too-much-choice effect (Scheibehenne et al., 2009), consumer hyperchoice (Mick et al., 2004), and the paradox of choice (Schwartz, 2004). Choice overload often results in the disconfirmation of consumer expectations, leading to a decrease in satisfaction with the chosen alternative and an increase in regret regarding the alternatives that were not chosen (Haghpour et al., 2022). ...
... Variety may be a desirable quality, but having too much of it might backfire if consumers are forced to compromise one desirable quality for another (Gourville & Soman, 2005). Providing additional product categories not only enhances apparent variety, but also leads to regret (Yan et al., 2015). ...
... Future studies could examine whether big option sets increase or decrease the impact of anticipated regret on consumer decisions (Gourville & Soman, 2005). (Mogilner et al., 2008;Yun & Duff, 2017). ...
Since Alwin Toffler coined the term choice overload in 1970, no systematic literature review has been conducted on this subject. At the same time, the three meta‐analytic studies available on the topic does not provide a comprehensive picture of the same. This systematic literature review seeks to critically evaluate the extant research on choice overload for 22 years using insights from 92 articles. After locating the major articles in the choice overload literature, we identified the theories used by researchers to explain the various aspects of choice overload, based on the TCCM framework. We then enlisted the contexts where the studies had been conducted, the characteristics (themes) of the studies, and the methodologies used in these articles. We further identified the relationships between the themes, the variables studied so far, the sampling types and sampling sizes and the statistical tools employed in these studies. Future researchers could investigate the impact of a variety of cognitive and affective factors that impact consumer psychological states and the likelihood of choice saturation. They could also focus on unexplored areas in the field of choice overload, such as comparing the effects of choice overload in physical and online contexts.
... Porter (1985) suggests that restructuring current sales approaches to align with changing consumer behavior can be a successful differentiating advantage. Even though it has long been universally suggested that a broad product assortment is beneficial to consumers meeting the heterogeneity of customer needs, recent research suggests that this may actually be detrimental to market share [15] [9]. Gourville and Soman [15] suggest that companies should shift their focus from non-sortable assortments to sortable assortments. ...
... Even though it has long been universally suggested that a broad product assortment is beneficial to consumers meeting the heterogeneity of customer needs, recent research suggests that this may actually be detrimental to market share [15] [9]. Gourville and Soman [15] suggest that companies should shift their focus from non-sortable assortments to sortable assortments. This means moving from the number of different attributes for similar products to the diversity of one attribute, such as size [15]. ...
... Gourville and Soman [15] suggest that companies should shift their focus from non-sortable assortments to sortable assortments. This means moving from the number of different attributes for similar products to the diversity of one attribute, such as size [15]. Assortment causes unsortable consumers psychologically trade-off between products, which can lead to internal conflicts that inherently delay the customer's purchase [36][15] [33]. ...
The purpose of this paper is to study how consumers’ attitudes toward different types of product assortment and Unpacking Framing under the moderating effects of consumption situation, prior knowledge of products, and involvement. Results are based on a survey with 344 respondents. The results indicate that consumers favor a diverse product assortment over a simple one. Second, if the consumer buys the product as a gift, they favor a more diverse product assortment, however, if the consumer buys it to consume by themselves, diversification or simplification of product assortment does not matter. Third, in the case of diverse product assortment, consumer favors detailed message framing over comprehensive one. Fourth, in the case of high prior knowledge, the consumer favors a detailed description of the product. Furthermore, there is no such difference in the case of low prior knowledge.
... The dependent variable was choice uncertainty, which was used in previous choice overload research (Goedertier et al., 2012;Gourville & Soman, 2005;Thai & Yuksel, 2017). Specifically, participants were asked to report how (un)certain they were that they made the right choice (7-point scale, 1 = Very certain, 7 = Very uncertain). ...
... The main dependent variable (choice uncertainty) is a single-item measure. Although this measure of uncertainty has been used in previous choice overload research (Goedertier et al., 2012;Gourville & Soman, 2005;Thai & Yuksel, 2017), and that most consumer studies treat this construct as unidimensional, future research should include various aspects of uncertainty (Stewart, 2021). Additionally, this research only studied choice overload via one indicator. ...
Although consumers are commonly exposed to numerous choices and the opportunity to touch products when they shop, the literature remains unclear on how both factors simultaneously affect choice. With the growth of online shopping, touch literature has studied the effects of mere touch (i.e., nondiagnostic tactile contact) or vicarious touch (e.g., observing a hand in physical contact with a product or imagining touching a product) to demonstrate that these nondiagnostic haptic inputs can comparably influence consumer attitude, just like diagnostic touch. By investigating the moderating effects of different haptic inputs on choice overload, this research reveals certain conditions in which nondiagnostic haptic inputs operate differently than those of diagnostic touch. We find that both mere touch (Study 1) and vicarious touch (Study 2) help reduce choice overload effects by eliminating the effect of choice set size on choice uncertainty, which is typically observed in the no touch (i.e., control) condition. As haptic cues have been increasingly employed to aid the online shopping experience for consumers, we also find that the choice overload effect is eliminated when an autotelic haptic cue is presented but amplified when an instrumental haptic cue is provided (Study 3). Besides, this research demonstrates that, while the moderating effects of the nondiagnostic haptic inputs are driven by increased personal control, instrumental touch can amplify choice overload effects due to the increased choice difficulty when choosing from large (vs. small) choice sets. These findings help retailers know what type of haptic cues to apply or avoid, as consumers have already been overloaded with abundant choices when they shop online.
... In fact, the N-EM option becomes a way for donors to defer their choice and delegate it to the charity. Moreover, choice deferral and delegation can reduce individuals' cognitive overload and potential for regret (Gourville and Soman 2005). ...
... The theory of choice deferral could explain this finding. This theory proposes that when individuals face complex decisions, they tend to defer the choice and look for ways to reduce cognitive overload and regret (Tversky and Shafir 1992, Dhar 1997, Gourville and Soman 2005. For donors, non-earmarking could be a way to defer their choice and delegate it to the charity that knows best how to make use of the donation. ...
Problem definition: Charities face tension when deciding whether to earmark donations, that is, allow donors to restrict the use of their donations for a specific purpose. Research shows that earmarking decreases operational performance because it limits charities’ flexibility to use donations. However, there is also a common belief that earmarking increases donations. Earmarking is assumed to increase donations through three mechanisms: by (i) giving donors control over their donations, (ii) increasing operational transparency of donations, and (iii) changing donors’ levels of altruism and warm-glow. To resolve this tension, we study how, when, and why earmarking affects donors’ decisions. We consider three important decisions donors make that impact the fundraising outcome: (i) preference between earmarking and nonearmarking, (ii) decision to donate or not (i.e., donor activation), and (iii) the donation amount. Methodology/results: We design three online experiments that allow us to quantify the effect of earmarking on donors’ decisions and to investigate the role of the three aforementioned mechanisms in fundraising. Our results reveal, for example, that earmarking activates more donors but it does not always increase donation amounts. In addition, we determine the conditions under which the three mechanisms affect the outcome of fundraising campaigns. Managerial implications: Our findings provide actionable insights for how charities can design fundraising campaigns more effectively and suggest when to leverage earmarking and the three mechanisms depending on the charities’ fundraising goals.
Funding: The authors gratefully acknowledge financial support provided by the Leeds School of Business at the University of Colorado Boulder.
Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0096 .
... Theme 1: Paradox of rational choice Townsend and Kahn (2014), Kamenica (2008), Lichtenstein and Slovic (2006), Chernev (2005), Slovic (1995), Shafir et al. (1993), Tversky and Simonson (1993), Simonson and Tversky (1992), Tversky and Shafir (1992), Kahneman (1981, 1991), Tversky and Thaler (1990), Simonson (1989), Huber et al. (1982), Thaler (1980), Tversky (1979, 1981), Kahneman (1974, 1981), Tversky (1969Tversky ( , 1972, Luce (1959), Simon (1957), Von Neumann and Morgenstern (1947) Guo (2022) Theme 2: Variety-seeking behavior Chuang et al. (2013), Levav and Zhu (2009), Kim and Drolet (2003), Ratner and Kahn (2002), Inman (2001), Ariely and Levav (2000), Hoch et al. (1999), Ratner et al. (1999), Kahn (1995), Menon and Kahn (1995), Kahn and Isen (1993), Simonson (1990), McAlister (1982, McAlister and Pessemier (1982) Yoon and Kim (2018) (2007), Gourville and Soman (2005), Chernev (2003aChernev ( , 2003b, Iyengar and Lepper (2000), Schwartz (2000), Bettman et al. (1998), Huffman and Kahn (1998), Dhar (1997) Cheek et al. (2022) The structure of the choice environment has emerged as a critical factor that significantly influences consumer choice under uncertainty, which was first articulated by Simon (1956). The choice environment also consists of how the choices are framed, significantly influencing consumers' decisions. ...
... The author reasoned that consumers are less likely to commit to a choice when preferences are uncertain. Gourville and Soman (2005) argue that variety is likely to backfire when the assortment is non-alignable. They defined a non-alignable assortment as a set of brands that vary along multiple non-compensatory dimensions. ...
The paradoxical findings in consumer choice research have captivated the interest of many scholars from diverse fields and transformed the understanding of consumer decision‐making. This paper is the first attempt to systematically review, synthesize, and integrate the paradoxical findings in consumer choice research. One of the first paradoxical findings was the violations of value maximation models of rational choice. The second important paradox in consumer choice research is the puzzling role of variety in consumer choices. We focus on these two critical paradoxes discovered in consumer choice literature over the last five decades and refer to them as the “paradox of rational choice” and the “paradox of variety.” We conducted a co‐citation cluster analysis to help identify the most significant studies in the domain. The cluster analysis helped eliminate the subjective bias in article selection. We also used inferential analysis to widen the scope of clusters to other relevant and especially recent studies. A review of 233 papers published between 1972 and 2023 reveals the four themes covering the two paradoxes of consumer choice. The first theme covers the first paradox: the paradox of rational choice. It presents research on preference reversals and other violations of value maximization rational choice models due to contextual factors and choice environment. The following three themes cover the second paradox of consumer choice: the paradox of variety. The second theme focuses on the benefits of variety and the natural desire of consumers to seek more variety. Paradoxically, the third theme highlights when and why variety will likely cause harmful psychological consequences for consumers. Finally, the last theme reconciles the opposing ideas of themes two and three by identifying the boundary conditions and suggesting ways to resolve this paradox. We also provide research directions that scholars can consider for future research related to each of these themes.
... Additionally, differentiated products that differ on multiple traits from each other are less likely to be purchased than differentiated products that only differ along one product characteristic. This especially applies if the needed degree of cognitive effort and the potential to regret rises (Gourville & Soman, 2005). A high similarity between products, as well as an overchoice of products or ambiguous information, can cause consumer confusion -an unpleasant state for customers that leads to decreased customer satisfaction, decreased repeated purchases, more returned products, reduced customer loyalty, and a worsened brand image (Mitchell & Kearney, 2002). ...
Product differentiation and diversification are important methods to align company offerings with customer needs more closely while increasing prices, raising revenues, fostering profitability, and strengthening competitive advantages at the same time. Aligning a company’s offerings closely with the needs and wants of customers has gained increasing importance. Customer-centricity is also conducted to align a corporation’s offerings with customer needs, while customer experience helps to elevate customer satisfaction. Product differentiation describes the alteration of a product, whereas product diversification describes the provisioning of new products for untouched markets and is seen by some scholars as an extensive form of product differentiation. While fostering the differentiation of products, it is shown that further willingness to pay can be skimmed from a market through differentiated product offerings. Moreover, sales numbers are increased because every customer can find a product that best serves their needs. However, too many varieties can lead to company-sided diseconomies and increased complexity costs. This paper illustrates the assumptions, dynamics, and effects of product differentiations and the accompanying effects on markets and market positionings. It is shown that product differentiation is not always in line with theoretical assumptions and that a deviation from the theoretical optimal amount of variety barges the risk of over-differentiation.
... However, studies suggest that an abundance of choice may paradoxically reduce satisfaction. For instance, offering more options can lead to decision difficulty and decreased satisfaction, a phenomenon termed the "choice overload effect" (Fasolo, McClelland, and Todd 2007;Gourville & Soman 2005;Iyengar and Lepper 2000;Schwartz 2004). While this effect has been debated, recent research focuses on understanding its moderators rather than its overall impact. ...
In the past few decades, there have been concerns of a possible “choice overload effect” in that the provision of more (vs. less) choice might decrease choice satisfaction as it increases the difficulty of selecting an option among many. However, beyond choice satisfaction, there are other outcomes of offering more choices worth investigating. We examine another potential outcome of offering more choices. The results from four experiments suggest that offering more choice increases the chooser's valuation of the chosen option, relative to offering less choice. This is because offering choice increases the chooser's psychological ownership of the chosen option, a premise derived from prior conceptualizations of choice as fostering control. Thus, we extend theoretical understanding of the consequences of offering choice beyond satisfaction, while at the same time offer implications for marketers interested in understanding the benefits—in addition to the potential harms—of offering choice for consumers.
... Additionally, differentiated products that differ on multiple traits from each other are less likely to be purchased than differentiated products that only differ along one product characteristic. This especially applies if the needed degree of cognitive effort and the potential to regret rises (Gourville & Soman, 2005). A high similarity between products, as well as an overchoice of products or ambiguous information, can cause consumer confusion -an unpleasant state for customers that leads to decreased customer satisfaction, decreased repeated purchases, more returned products, reduced customer loyalty, and a worsened brand image (Mitchell & Kearney, 2002). ...
Product differentiation and diversification are important methods to align company offerings with customer needs more closely while increasing prices, raising revenues, fostering profitability, and strengthening competitive advantages at the same time. Aligning a company's offerings closely with the needs and wants of customers has gained increasing importance. Customer-centricity is also conducted to align a corporation's offerings with customer needs, while customer experience helps to elevate customer satisfaction. Product differentiation describes the alteration of a product, whereas product diversification describes the provisioning of new products for untouched markets and is seen by some scholars as an extensive form of product differentiation. While fostering the differentiation of products, it is shown that further willingness to pay can be skimmed from a market through differentiated product offerings. Moreover, sales numbers are increased because every customer can find a product that best serves their needs. However, too many varieties can lead to company-sided diseconomies and increased complexity costs. This paper illustrates the assumptions, dynamics, and effects of product differentiations and the accompanying effects on markets and market positionings. It is shown that product differentiation is not always in line with theoretical assumptions and that a deviation from the theoretical optimal amount of variety barges the risk of over-differentiation.
... An important competence of retailers is not only offering consumers choice through a large assortment but also curating the offering to reduce choice overload and buyer's remorse and ensure quality (Gourville & Soman, 2005;Xu et al., 2013). ...
... Esta advertencia resulta lógica, ya que no genera ingresos para la plataforma y, además, implica el uso de música de artistas que, para Pelly (2017) de la plataforma proporciona recomendaciones musicales a los usuarios, basadas en escuchas previas (Pontello, Holanda, Guilherme, Cardoso, Goussevskaia, Silva et al. 2017;Yakura, Nakano & Goto, 2018). Este hecho puede traducirse en una sobrecarga de elección (Gourville & Soman, 2005). Para la confección de las listas de reproducción de forma manual, ya sea a través de los equipos de trabajo de las plataformas, o creadas por la marca como un usuario particular, existen multiplicidad de criterios de selección y agrupación: contexto (Joven & Jenkins, 2028) ...
Este estudio se centra en el fenómeno de las brand playlist de actividad. Estas listas musicales están concebidas para ser escuchadas mientras se realizan actividades relacionadas con los productos o servicios que la marca representa. La estrategia permite a la marca captar la atención de la audiencia y compartir tiempo con ella. Planteado desde el prisma de la economía de la atención, el objetivo es determinar los criterios de curación para la selección y agrupación de las canciones, y comprobar si responden adecuadamente con el propósito de la marca o, por lo contrario, si son resultado de un trabajo arbitrario. Para ello, se han analizado 50 brand playlists de actividad pertenecientes a 7 marcas. El análisis cualitativo y cuantitativo se ha realizado a partir de variables extraídas de la literatura especializada, que determinan las características de la selección musical y agrupación: contexto, género musical, valencia emocional, duración, idioma, semántica y notoriedad, lo que constituye un modelo original e inédito de análisis para esta categoría de listas. A partir de la discusión de los resultados, es posible concluir que las brand playlists responden a un tipo de contenido no intrusivo que transmite los valores y la personalidad de marca a través de la música, adquiriendo la apariencia editorial de la plataforma. De este modo, cabalgan entre el branded content y la publicidad nativa. Asimismo, dentro de la economía de la atención, responderían a la categoría de un contenido que realza la experiencia de consumo, siendo resultado de una selección y agrupación musical que responde a criterios adecuados y no arbitrarios.
... It has been shown that the problem of overchoice [3] can decrease the consumption of products [4] and reduce revenue to the site [5]. Providers can ask their users for additional information about their expectations regarding items to reduce the number of choices presented. ...
Classifieds pose numerous challenges for recommendation methods, including the temporary visibility of ads, the anonymity of most users, and the fact that typically only one user can consume an advertised item. In this work, we address these challenges by choosing models and evaluation procedures that are considered accurate, diverse, and efficient (in terms of memory and time consumption during training and prediction). This paper aims to benchmark various recommendation methods for job classifieds, using OLX Jobs as an example, to enhance the conversion rate of advertisements and user satisfaction. In our research, we implement scalable methods and represent different approaches to the recommendations: Alternating Least Square (ALS), LightFM, Prod2Vec, RP3Beta, and Sparse Linear Methods (SLIM). We conducted A/B tests by sending millions of messages with recommendations to perform online evaluations of selected methods. In addition, we have published the dataset created for our research. To the best of our knowledge, this is the first dataset of its kind. It contains 65,502,201 events performed on OLX Jobs by 3,295,942 users who interacted with (displayed, replied to, or bookmarked) 185,395 job ads over two weeks in 2020. We demonstrate that RP3Beta, SLIM, and ALS perform significantly better than Prod2Vec and LightFM when tested in a laboratory setting. Online A/B tests also show that sending messages with recommendations generated by the ALS and RP3Beta models increases the number of users contacting advertisers. Additionally, RP3Beta had a 20% more significant impact on this metric than ALS.
... Assortment. Empirical evidence demonstrates the importance of variety (Gourville and Soman, 2005) and the organization of an assortment (Broniarczyk, 2018). Specifically, a study by Sharkey et al. (2012) shows that assortment variety can affect food consumption, indeed a larger assortment variety offers consumers more food choice options causing increased consumption. ...
Purpose. The current work aims to present a review of academic literature that systematizes the body of knowledge related to marketing and consumer behavior in order to identify the most effective variables that encourage the consumer towards a proper and better lifestyle, accordingly the paradigm of management, marketing and technology efforts to promote a "better" society preventing obesity. Design/methodology/approach. A literature review was carried out to examine the studies of marketing and consumer behavior published in international peer-reviewed journals over the last twenty-three years (2000-2023). Our review finally considered a total amount of 46 articles.
Findings. Findings elucidate three overarching themes and associated sub-hemes, encompassing: (1) Product design for obesity prevention, including aspects such as labeling, nomenclature, packaging and assortment; (2) Technology-supported preventive measures, involving mobile applications, self-monitoring, short message services and digital therapeutics; and (3) Marketing and communication strategies, incorporating social advertising, nudge, social influence and initiatives targeting childhood obesity prevention. Furthermore, a comprehensive research agenda is presented, delineating potential avenues for future investigations predicated on the utility of the results in fostering subsequent endeavors within the realms of: efficacy and effectiveness studies; personalization and tailoring; behavioral change techniques and gamification; user experience and acceptance; cost-effectiveness and implementation; as well as ethical and privacy concerns.
Research limitations/implications. Main limitations are related to the characteristics of the analyzed literature, resulting in only English journal articles, book chapter and so on. Thus, other relevant contributions in different languages discussing interesting insights might have been neglected.
Practical implications. This study offers several insights to managers, marketers and policymakers involved in the issue of the obesity prevention. Since obesity represents a crucial challenge for public health at a global level, with its incidence reaching epidemic proportions in recent decades, the results may be extremely useful and powerful because suggesting-by employing a robust resulting corpus of knowledge on this domain-several practical features, actions and tactics to face such an important challenge. Moreover, this paper offers for scholar and researcher a systematized knowledge around the issues of obesity prevention, together with a detailed research agenda emerging by the critical analysis of the emerging insights, and to practitioners systematized useful insights to project and develop their future business strategies.
Social implications. By providing several actions and tactics for obesity prevention (e.g. as for product labeling, naming, packaging, assortment; the exploitation of new technologies for mobile applications design, self-monitoring, short message service (SMS) alert systems, digital therapeutics; the role of social advertising, Obesity prevention: a literature review nudge, social influence) this work perfectly match the emerging societal orientation related to business, marketing and technology efforts to create a "better" society.
Originality/value. The study shed lights the need for a holistic approach to obesity prevention, involving interaction between individual main topics. Importantly this is the first study to analyze the issue of obesity prevention by considering a multidisciplinary corpus of literature, analyzed trough an individual-centric orientation.
... Die Orientierungs funktion von Informationen wird zudem eingeschränkt, wenn die Menge zu Über forderung bei Entscheidungsprozessen führt (›overchoice‹) (vgl. Gourville/Soman 2005;Chernev et al. 2015). Die freiwillige Verbraucherteilhabe an nachhaltigen Konsummärkten setzt also -neben dem Zugang zu nachhaltigen Konsumoptio nen -voraus, dass Informationen verlässlich und verständlich sind. ...
Die Verbraucherteilhabe an nachhaltigen Konsummärkten ist erschwert. Die Verlagerung von Konsum in den digitalen Raum bietet Möglichkeiten, dieses Dilemma zu lösen. Eine Schlüsselrolle kommt hierbei einer effektiven Nachhaltigkeitskommunikation zu. Jedoch zeigt die Analyse, dass die aus wissenschaftlicher Sicht effektiven Kommunikationsinstrumente in der Praxis des Online-Handels bislang nur unsystematisch genutzt werden. Geeignete Formate für den Wissenstransfer zwischen Forschung und Praxis könnten das ungenutzte Potenzial heben.
... Advances in science and technology, combined with globalisation, have drastically changed the way humans conduct economic activities, giving consumers a wide range of options (Lee & Lee, 2004;Lurie, 2004) even when making simple decisions such as what to eat for breakfast. While it may not be consequential to make the wrong choice for a daily decision, it is a different story when it comes to lifetime decisions such as selecting a healthcare plan or making a retirement investment, where one has to make the best choice from dozens or even hundreds of options (Gourville & Soman, 2005). It is thus essential that individuals, as well as corporations, governments and state agencies, make informed decisions among the numerous options available to them, as the cost of making the wrong decision or delaying it can be quite significant (Sagi & Friedland, 2007). ...
Having a multitude of choices can be advantageous, yet an abundance of options can be detrimental to the decision‐making process. Based on existing research, the present study combined electroencephalogram and self‐reported methodologies to investigate the neural mechanisms underlying the phenomenon of choice overload. Behavioural data suggested that an increase in the number of options led to negative evaluations and avoidance of choice tendencies, even in the absence of time pressure. Event‐related potential results indicated that the large choice set interfered with the early visual process, as evidenced by the small P1 amplitude, and failed to attract more attentional resources in the early stage, as evidenced by the small amplitude of P2 and N2. However, the LPC amplitude was increased in the late stage, suggesting greater investment of attentional resources and higher emotional arousal. Multivariate pattern analysis revealed that the difference between small and large choice set began at around 120 ms, and the early and late stages were characterised by opposite activation patterns. This suggested that too many options interfered with early processing and necessitate continued processing at a later stage. In summary, both behavioural and event‐related potential (ERP) results confirm the choice overload effect, and it was observed that individuals tend to subjectively exaggerate the choice overload effect.
... For example, when participants are presented with a simplified version of experimental materials (i.e., cognitive resources are not infringed upon), an increase in the number of options will not reduce the probability of purchasing a target product. However, when participants are presented with the full version of the experimental materials (i.e., they are cognitively overloaded), an increase in the number of options increases the proportion of those who chose the item (Gourville and Soman 2005). ...
Too many choices result in choice overload, the effects of which are generally negative. The capacity of short-term memory also impacts the ability and efficiency of people to process multiple options or information, thus affecting the experience of choice. Using three different stimuli for measuring short-term memory capacity and an actual choice task, we provide converging evidence that short-term memory has a moderating effect on the choice overload effect (which is more likely to occur in individuals with poor short-term memory ability), but it is important to note that this moderation is stimulus-specific. That is to say, the choice overload effect of individuals in the picture choosing task is impacted solely by their short-term memory capacity of pictures, and has nothing to do with other stimulus types. It can help consumers and businesses better process the way information is presented to maximize short-term memory and reduce the occurrence of choice overload effect.
... Advances in science and technology, combined with globalisation, have drastically changed the way humans conduct economic activities, giving consumers a wide range of options (Lee & Lee, 2004;Lurie, 2004) even when making simple decisions such as what to eat for breakfast. While it may not be consequential to make the wrong choice for a daily decision, it is a different story when it comes to lifetime decisions such as selecting a healthcare plan or making a retirement investment, where one has to make the best choice from dozens or even hundreds of options (Gourville & Soman, 2005). It is thus essential that individuals, as well as corporations, governments and state agencies, make informed decisions among the numerous options available to them, as the cost of making the wrong decision or delaying it can be quite significant (Sagi & Friedland, 2007). ...
Having a multitude of choices can be advantageous, yet an abundance of options can be detrimental to the decision-making process. Based on existing research, the present study combined electroencephalogram and self-reported methodologies to investigate the neural mechanisms underlying the phenomenon of choice overload. Behavioral data suggested that an increase in the number of options led to negative evaluations and avoidance of choice tendencies, even in the absence of time pressure. Event-related potential results indicated that the large choice set interfered with the early visual process, as evidenced by the small P1 amplitude, and failed to attract more attentional resources in the early stage, as evidenced by the small amplitude of P2 and N2. However, the LPC amplitude was increased in the late stage, suggesting greater investment of attentional resources and higher emotional arousal. Multivariate pattern analysis revealed that the difference between small and large choice set began at around 120ms and the early and late stages were characterized by opposite activation patterns. In conclusion, this study suggested that too many options interfered with early processing and necessitate continued processing at a later stage.
... He shows that ex-post regret leads to agents limiting their choices ex-ante. Gourville and Soman (2005) suggest that, for some assortment types, a larger variety increases both the regret and difficulty of comparison. They find that variety can backfire and decrease brand market share. ...
Consumer choice of differentiated products, such as wine, depends on the composition of the choice set consumers are choosing from. However, choice sets are often situationally defined through wine-tasting lists or displayed wines in a particular tasting and sales environment. In this paper, we use an experiment to explicitly modify the saliency of wine options available outside the tasting room choice set and the amount of sensory information available about the wines before wine tasting. We explicitly test whether consumer regret and fear of missing out on alternative options or consumer search costs are more likely to drive behavior around large choice sets. We find that increasing the saliency of outside options decreases one's propensity to taste the wines available for tasting and purchase immediately, while changing search costs through sensory descriptions does not affect tasting behavior. This provides support for the anticipated regret and fear of missing out motivations for behavior around large wine-tasting lists.
... The participation of large numbers of backers improves the probability of crowdfunding success (Wang et al. 2020). In contrast, Gourville and Soman (2005) found a negative relationship between the number of backers and crowdfunding success. Communication between crowdfunding stakeholders is considered necessary for sharing ideas, opinions, and information. ...
This study examined whether fixed or flexible funding mechanisms influence crowdfunding success. Under the fixed funding mechanism, the pledges contributed to the crowdfunding campaign projects are returned to the backers if the project fails, whereas, under the flexible funding mechanism, the project creator can keep all the raised pledges, irrespective of whether the project succeeds or fails. Secondary data consisted of reward-based crowdfunding projects retrieved from The Crowd Data Centre. Logistic regression was employed to respond to research objectives. The results reveal that the fixed funding mechanism increases the probability of success more than flexible funding. Entrepreneur experience, spelling errors, and project description negatively affect crowdfunding success, and backers positively affect crowdfunding success. The findings guide entrepreneurs seeking financing to design and choose an appropriate funding mechanism that effectively reduces the failure rate. Although many entrepreneurs seek funding in the crowdfunding market, relatively little research has been conducted on the influence of flexible or fixed funding mechanisms on crowdfunding success in Africa. This study provides entrepreneurs with appropriate financing strategies that enhance crowdfunding success. The empirical literature indicates that the flexible funding mechanism creates distrust among backers due to unrealistic target amounts.
Despite free access to complete information regarding hotel quality and reference prices, consumers perceive significant price differences across different online platforms. We explore how perceived price dispersion on online travel agency platforms influences consumer purchase intention through mental account theory and propose a psychological mechanism explaining why consumers may tolerate and even embrace price discrepancies. Study 1 employs a scenario-based experiment that manipulates differing levels of price dispersion for the same hotel booking, demonstrating that higher PPD significantly amplifies perceived transaction utility and, in turn, acquisition utility. Study 2 corroborates these findings through an online survey with judgment sampling, highlighting that consumers—despite access to comprehensive OTA information—are often motivated, rather than deterred, by price discrepancies; multiple variable combinations were tested to ensure robust findings. This study challenges traditional marketing theories suggesting that price dispersion signals market unfairness and reduces consumers’ purchasing intention; instead, it mentally stimulates consumers. This perception enhances transaction and acquisition utility, positively impacting purchase intention. We also offer a robust model for mechanism study and provide insights for leveraging price dispersion as a cost-less promotional strategy, potentially increasing consumer engagement without additional marketing expenditure. We contribute to the literature by integrating the mental account theory into the context of online marketplaces and developing a price dispersion model with psychological utility in the consumer decision-making process.
Purpose
Consumers often face trade-offs between important product attributes. Previous research suggests that individuals tend to prioritize attribute differences that are easily processed and aligned. This paper aims to examine the contexts in which nonalignable attribute differences can positively impact consumers’ perceptions of products.
Design/methodology/approach
Four lab experiments were conducted to explore how consumer preferences for superior-alignable versus superior-nonalignable products vary based on purchase occasions, with a specific focus on routine and special occasions.
Findings
Consumers tend to prefer superior-nonalignable products on special occasions and superior-alignable products on routine occasions. This is driven by stronger uniqueness motives on special (vs routine) occasions, as consumers associate nonalignable attribute differences more closely with product specialness. The research also explores the moderating roles of consumers’ need for uniqueness (NFU) and psychological ownership. Consumers with higher levels of NFU consistently prefer superior-nonalignable products, regardless of the occasion type. Additionally, when consumers feel psychological ownership of products with superior-alignable attributes, the perceived specialness of these products increases, reducing the influence of occasion type on consumer preferences for attribute alignability.
Originality/value
This research emphasizes the importance of aligning product attribute differences with specific purchase occasions in marketing strategies.
This paper examines the effect of product display order on consumer satisfaction with product choice in products with a wide range of color variations. The studies showed that product displays based on analogous hue color schemes leads to greater visual harmony compared to complementary hue color schemes, as a result, choice difficulty decreases, and product choice satisfaction increases. Furthermore, individuals who employ a holistic thinking style are more likely to perceive visual harmony when presented with analogous hue color schemes.
Social commerce integrates user interactions and user‐generated content with commercial activities in the context of social media platforms. Examples include Instagram Shopping and TikTok Shopping, where brands attach product tags directly to their posts, enabling users to complete purchases within the social media platform. A user's on‐site purchase decision can be driven by the impulse to buy upon seeing a product, but is constrained by their limited attention. In this paper, we propose a choice model that captures users' impulsive behavior and limited attention span during purchase decisions on social media platforms. We explore a retailer's product display problem on a social media product page. We show that the size of the optimal display set can be monotone decreasing or increasing on the level of impulsiveness of the customer population, depending on the interplay between the population's inclination for impulse buying and their attention span. When the influence of impulse buying outweighs the effect of attention span, it can be optimal for the retailer to display a larger set of products. Additionally, we examine two strategies for retailers to stimulate purchases on social media platforms. One is to invest in environmental cues to enhance user impulse buying behavior, and the other considers leveraging influencer promotion of a specific product.
Varying search costs can lead to choice deferral and choice closure behavior, with effects of strategic pricing and retargeting.
Problem definition: Online retailing platforms are increasingly relying on personalized recommender systems to help guide consumer choice. An important but understudied question in such settings is how many products to include in a recommendation set. In this work, we study how the number of recommended products influences consumers’ search and purchase behavior in an online personalized recommender system within a retargeting setting. Methodology/results: Via a field experiment involving 1.6 million consumers on an online retailing platform, we causally demonstrate that consumers’ likelihood of purchasing any product from the recommendation set first increases then decreases as the number of recommended products increases. Importantly, as much as 64% of the decrease in purchase probability (i.e., the choice overload effect) can be attributed to a decrease in consumers’ likelihood of starting a search (i.e., clicking on any recommended product). We discuss the possible behavioral mechanisms driving these results and analyze how these effects could be heterogeneous across different product categories, price ranges, and timing. Managerial implications: This work presents real-world experimental evidence for the choice overload effect in online retailing platforms, highlights the important role of consumer search behavior in driving this effect, and sheds light on when and how limiting the number of options in a recommender system may be beneficial to online retailers.
Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0659 .
The number of candidates running in U.S. primary elections is increasing. Contested primary elections force voters to decide between candidates that share party labels and are ideologically similar. Similar to contexts of non-partisan elections, an increase in the number of candidates should exacerbate the cognitive demand of voting in primary elections. We expect large candidate fields in primaries make voters (1) spend less time looking at each candidate profile, (2) more likely to abstain, (3) more likely to vote based on ballot position, and (4) more likely to feel overwhelmed with the decision. All four of these expectations were preregistered. We test the effect of large candidate fields on voter behavior using a survey experiment ( n = 2000) fielded by YouGov. We find large candidate fields cause respondents to spend less time looking at candidate profiles, to select candidates in the first half of the ballot, and to feel overwhelmed by the decision-making process. In contrast to our expectations, we find large candidate fields make respondents less likely to abstain.
International trade plays a pivotal role in the global economy, necessitating efficient and reliable transportation methods for the movement of goods across borders. In this context, the choice between sea and air freight transportation modes holds significant implications for businesses seeking to optimize their supply chain operations. This study presents a comparative analysis of sea and air freight transportation, focusing on key dimensions such as cost efficiency, transit time and reliability, regulatory compliance, and technological advancements, the research aims to provide insights into the factors influencing transportation mode selection and their implications for global supply chains and examines the preferences, perceptions, and decision-making factors of stakeholders involved in international trade and logistics, providing valuable insights for businesses, and industry stakeholders. By understanding the trade-offs involved in selecting between these modes, stakeholders can make informed decisions to optimize their supply chain operations, minimize costs, and enhance overall efficiency. Ultimately, this comparative study aims to contribute to the body of knowledge in the field of logistics and supply chain management by providing a nuanced understanding of the factors influencing the choice between sea and air freight transportation in international trade scenarios. I INTRODUCTION In global commerce, the movement of goods across borders and continents is the thread that binds economies together. International trade is not merely a transactional exchange of products; it is a complex interplay of supply chains, logistics networks, and market forces that shape nations' economic landscape and billions of lives worldwide. At the heart of this intricate web of exchange lies the pivotal role of freight transportation, the engine that drives the movement of goods from producer to consumer, from factory floor to store shelf, and from farm to table. The significance of freight transportation cannot be overstated. It is the conduit through which raw materials are transformed into finished products, surplus supply finds demand and economic prosperity is forged and distributed. As globalization has accelerated in recent decades, spurred by advances in technology, communication, and trade liberalization, the volume and complexity of international freight movements have reached unprecedented levels. Today, goods sourced from distant corners of the globe find their way into homes and businesses with remarkable speed and efficiency, that part of the ingenuity and efficiency of the global transportation infrastructure. Within the realm of international freight transportation, two modes reign supreme: sea and air. These two modes represent the logistics world, each offering a unique set of advantages and challenges that shape the decisions of businesses, governments, and consumers. Sea transportation, with its vast fleet of cargo ships traversing the world's oceans, provides a cost-effective solution for the bulk movement of goods over long distances. From containerized cargo to bulk carriers to specialized vessels for liquid and gas transport, the maritime industry forms the backbone of global trade, carrying the world's goods by volume. In contrast, air transportation, with its fleet of cargo planes crisscrossing the skies, offers unparalleled speed and flexibility, at a premium price. From perishable goods to high-value electronics to time-sensitive shipments, air freight serves as the lifeblood of industries where speed is of the essence and just-in-time delivery is non-negotiable. Despite accounting for only a small fraction of total freight volume, air transportation plays an outsized role in certain sectors of the economy, driving innovation, enabling global supply chains, and connecting markets in once unimaginable ways.
Through a large-scale field experiment with 393,036 customers considering opening a credit card account with a nationwide retail bank, we investigate how providing transparency into an offering’s tradeoffs affects subsequent rates of customer acquisition and long-run engagement. Although we find tradeoff transparency to have an insignificant effect on acquisition rates, customers who were shown each offering’s tradeoffs selected different products than those who were not. Moreover, prospective customers who experienced transparency and subsequently chose to open an account went on to exhibit higher-quality service relationships over time. Monthly spending was 9.9% higher and cancellation rates were 20.5% lower among those who experienced transparency into each offering’s tradeoffs. Increased product use and retention accrued disproportionately to customers with prior category experience: more-experienced customers who were provided transparency spent 19.2% more on a monthly basis and were 33.7% less likely to defect after nine months. Importantly, we find that these gains in engagement and retention do not come at the expense of customers’ financial well-being: the probability of making late payments was reduced among customers who experienced transparency. We further find that the positive effects of tradeoff transparency on engagement and retention were attenuated in the presence of a promotion that provided financial incentives to choose particular offerings. Taken together, these results suggest that providing transparency into an offering’s tradeoffs may be an effective strategy for informing customer choices, leading to better outcomes for customers and firms alike.
This paper was accepted by Vishal Gaur, operations management.
Funding: Funding for this research, apart from the costs Commonwealth Bank of Australia internally incurred to support the experiment, was provided by Harvard Business School. R. W. Buell has received compensation from Commonwealth Bank of Australia in the past for executive education teaching.
Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.4985 .
In several applications of the stochastic multiarmed bandit problem, the traditional objective of maximizing the expected total reward can be inappropriate. In this paper, we study a new objective in the classic setup. Given K arms, instead of maximizing the expected total reward from T pulls (the traditional “sum” objective), we consider the vector of total rewards earned from each of the K arms at the end of T pulls and aim to maximize the expected highest total reward across arms (the “max” objective). For this objective, we show that any policy must incur an instance-dependent asymptotic regret of [Formula: see text] (with a higher instance-dependent constant compared with the traditional objective) and a worst case regret of [Formula: see text]. We then design an adaptive explore-then-commit policy featuring exploration based on appropriately tuned confidence bounds on the mean reward and an adaptive stopping criterion, which adapts to the problem difficulty and simultaneously achieves these bounds (up to logarithmic factors). We then generalize our algorithmic insights to the problem of maximizing the expected value of the average total reward of the top m arms with the highest total rewards. Our numerical experiments demonstrate the efficacy of our policies compared with several natural alternatives in practical parameter regimes. We discuss applications of these new objectives to the problem of conditioning an adequate supply of value-providing market entities (workers/sellers/service providers) in online platforms and marketplaces.
This paper was accepted by Vivek Farias, data science.
Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.00801 .
People are faced with an oversupply of almost ever type of good. Due to the large number of options, it has become very important for service providers to understand, how customers act when they book leisure activities online. As far as the researcher knows, no one has looked into how having too many options affects people's decisions when they book leisure activities online before. This study looks at the difference between leisure activities done at home and while on holiday, taking into account the issue of choice overload when booking leisure activities online. There is a plan to use an integrated research approach that utilizes cognitive dissonance as well as spillover theories to testhypotheses. This study employed Gen Y (17-37 years) who have visited Goa in the last six months. The study's conclusions have consequences for both tourism-related businesses and consumers, guiding how they act, their emotions, judgments, and behaviors toward evaluating the alternatives.
Since a large area of cybersecurity research is technically centered but most cyber incidents are human enabled (Nobles, 2018), a shift in focus towards behavioral issues is imperative to improve the understanding of these problems. Research in behavioral economics shows that cognitive biases can impact the decision-making process. For example, a seminal study conducted by Iyengar and Lepper (2000) reveals that a large array of product options attracted customers to browse, but fewer choices got them to buy. Similar research shows that when presented with a large array of options, customers tend to defer decisions, search for alternatives, or even opt not to choose (Dhar, 1997; Shafir, Simonson and Tversky, 1993). Choice overload bias, also known as over-choice, choice paralysis, or the paradox of choice, describes how individuals get overwhelmed when presented with a large number of options to choose from. While we tend to assume that more choice is a good thing (Ryan and Deci, 2001), behavioral economics related research has shown that people have a harder time choosing from a larger array of options (Chernev, Böckenholt and Goodman, 2015). This study translates extant behavioral economics based research on choice overload from various disciplines (e.g., business, public administration, medical science, sociology) and explores its impact on cybersecurity.
This study is intended for researchers (and doctoral students) interested in learning more on the use of machine learning methods in non-investment crowdfunding (i.e., reward- and donation-based). In particular, the study illustrates the insights that machine learning methods could provide on non-investment crowdfunding, for example, through data and information visualization, the ranking of features importance, and prediction assessment metrics. Specifically, I use four machine learning methods (gradient boosted decision trees, random forests, shallow neural networks, and support vector machines). As the literature shows, machine learning methods outperform classical regression models when the underlying relations are nonlinear. As such, the study offers some insights on the nonlinear relationships that could exist between the explanatory variables and the likelihood of success for art projects (e.g., threshold and Goldilocks effects). The study also offers some guidance to art project creators.
In this article we present a manifesto for research into the complex interplay between social media, music streaming services, and their algorithms, which are reshaping the European music industry—a sector that has transitioned from ownership to access-based models. Our focus is to assess whether the current digital economy supports a fair and sustainable development for cultural and creative industries. The manifesto is designed to pave the way for a comprehensive analysis. We begin with the context of our research by briefly examining the de-materialization of the music industry and the critical role of proprietary algorithms in organizing and ranking creative works. We then scrutinize the notion of 'fairness' within digital markets, a concept that is attracting increasing policy interest in the EU. We believe that, for 'fairness' to be effective, the main inquiry around this concept – especially as regards remuneration of content creators - shall be necessarily interdisciplinary. This presupposes collaboration across complementary fields to address gaps and inconsistencies in understanding how these platforms influence music creation and consumption and whether these environments and technologies should be regulated. We outline how interdisciplinary expertise (political science, law, economics, and computer science) can enhance the current understanding of 'fairness' within Europe's cultural policies and help address policy challenges. The article details how our research plan will unfold across various disciplinary hubs, culminating in the integration of their findings to produce the ‘key exploitable results’ of a Horizon Europe project (Fair MusE) that aims to explore challenges and opportunities of today’s digital music landscape.
Online alışveriş sepetini terk etme davranışı, sanal alışveriş aktiviteleri esnasında tüketicinin ürün veya ürünleri alışveriş sepetine eklemesi, fakat sonunda ödeme gerçekleştirmeden ve satın alma yapmadan sepeti terk etmesi olgusudur. Bu olgunun anlaşılması noktasında literatürde halen sınırlılık bulunması çeşitli araştırma sorularına ilham vermektedir. Bu çalışmada online alışveriş sepetini terk etme davranışı S-O-R paradigmasında ele alınarak tüketicinin zihinsel süreci içerisinde oluşumu çerçevelendirilmiştir. Bu kapsamda tüketicinin online alışverişler esnasında karşı karşıya olabileceği seçim fazlalığı (seçim paradoksu) ve bu bağlamda yaşayabileceği duygusal kararsızlıkla beraber ödeme aşamasında tereddüt ortaya çıkabileceği, online alışveriş sepetini terk etme davranışının meydana gelmesinde etkili olabileceği varsayımından yola çıkılmıştır. Bu çerçevede seçim paradoksu, duygusal kararsızlık, ödeme anında tereddüt ve sanal alışveriş sepetini terk etme davranışı arasındaki ilişkilerin istatistiksel olarak belirlenmesi amaçlanmıştır. Bu amaca yönelik olarak bir nicel araştırma kapsamında yürütülen anket uygulaması ile kolayda örnekleme yönteminde 400 tüketiciden veri elde edilmiştir. Veriler SPSS ve AMOS yazılımlarında analiz edilmiştir. Yapısal eşitlik modellemesi sonucunda ortaya çıkan bulgular, seçim paradoksu, duygusal kararsızlık, ödeme anında tereddüt ve sanal alışveriş sepetini terk etme davranışı arasında önemli ölçüde pozitif doğrusal ilişkiler olduğunu göstermiştir.
The phenomenon of abandoning the online shopping cart
refers to the behavior of consumers adding products to
their virtual shopping carts during the online shopping
activities but ultimately leaving the cart without
completing the purchase and payment. However, the
limited research in the literature regarding this
phenomenon inspires various research questions. In this
study, the abandonment of the online shopping cart
behavior is framed within the S-O-R paradigm, focusing
on the consumer's mental process. Within this context,
it is assumed that the choice overload consumers may face
during online shopping, coupled with emotional
ambivalence, and hesitation at the checkout stage, could
lead to uncertainty during the payment process, which in
turn might contribute to the online shopping cart
abandonment. To address this, the relationships among
choice overload, emotional ambivalence, hesitation at
check-out, and online shopping cart abandonment are
statistically examined. A quantitative research approach
was adopted, and data were obtained through a survey
administered to 400 consumers using convenience
sampling. The data were analyzed using SPSS and
AMOS software. The findings from the structural
equation modeling revealed significant positive linear
relationships between choice overload, emotional
ambivalence, hesitation at check-out, and online
shopping cart abandonment
This study presents the first field investigation of the sales impact of cause-related marketing promotions (CMPs) in retail settings. Whereas prior work primarily studies CMPs in simplified experimental settings, actual FMCG (fast-moving consumer goods) markets are considerably more complex; ergo, consumers are unlikely to consider and evaluate all brands and CMPs in detail. Our analysis based on 63 CMPs across 20 categories therefore investigates the short-term sales impact of CMP as a function of the brand and category context in which they are executed. On average, CMPs run eleven weeks and donate 3.2 percent of product price, resulting in an average sales lift of 4.9 % per week. Our findings suggest that a necessary precondition for CMP effectiveness is that consumers notice it at the point of sale and hence have considered the CMP brand for factors other than the CMP itself. Accordingly, the sales impact of CMP can more than double when the category assortment is smaller with less price dispersion, the brand is a category leader, or is priced below category average. Brands operating in less favorable market conditions can still achieve above-average CMP impact by combining CMPs with price promotions to ensure consumer consideration.
There has always been some cannibalization between e-commerce retailing and brick-and-mortar retailing. In China, e-commerce retailing is outperforming brick-and-mortar retailing, while the opposite is true in Japan. Today, as e-commerce retailing is becoming a bigger part of people's lives, the focus of the industry has shifted to e-commerce retailing. Therefore, this chapter first introduces the e-commerce giants in China and Japan, namely Alibaba, JD.com, Pinduoduo, Rakuten Ichiba, Amazon, and Yahoo! shopping. Then, the chapter develops a hypothesis model that investigates the impact of elements of offline customer experience and online customer experience on customer satisfaction, and conducts a comparison between Chinese and Japanese consumers. The empirical results find that Chinese consumers place more importance on offline customer experience including in-store environment and product assortment as well as online customer experience including interactivity and convenience, while Japanese consumers place more importance on offline customer experience including personal interaction and product assortment as well as online customer experience including convenience. Finally, based on the empirical results and the current situation of the retail industry in China and Japan, this chapter provides some suggestions for the development of e-commerce retailing in China and Japan.KeywordsE-commerce platformerWebroomingShowrooming behaviorOmni-channel paymentCustomer experienceOnline and offline
A proposal is made that one way to compete effectively in the 21st century is to meet customers’ needs over time better than
the competition by offering a high-variety product line. More variety in a product line can make it more likely that each
consumer finds exactly the option he or she desires (customization strategy). In addition, more variety in a product line
can allow each consumer to enjoy a diversity of options over time (variety-seeking strategy). Other issues such as profitability,
cost considerations, how much variety to offer and where in the delivery chain to offer it, and when does too much variety
cause confusion or overload are also discussed.
Most choice models in marketing implicitly assume that the fundamental unit of analysis is the brand. In reality, however, many more of the decisions made by consumers, manufacturers, and retailers occur at the level of the stock-keeping unit (SKU). The authors address a variety of issues involved in defining and using SKUs in a choice model, as well as the unique benefits that arise from doing so. They discuss how a set of discrete attributes (e.g., brand name, package size, type) can be used to characterize a large set of SKUs in a parsimonious manner. They postulate that consumers do not form preferences for each individual SKU, per se, but instead evaluate the underlying attributes that describe each item. The model is shown to be substantially superior to a more traditional framework that does not emphasize the complete use of SKU attribute information. Their analysis also highlights several other benefits associated with the proposed modeling approach, such as the ability to forecast sales for imitative line extensions that enter the market in a future period. Other implications and extensions also are discussed.
Most supermarket categories are cluttered with items or SKUs (stock-keeping units) that differ very little at the attribute level. Previous research has found that reductions (up to 54%) in the number of low-selling SKUs need not affect perceptions of variety, and therefore sales, significantly. In this research, we analyze data from a natural experiment conducted by an online grocer in which 94% of the categories experienced dramatic cuts in the number of SKUs offered, particularly low-selling SKUs. We find sales were indeed affected dramatically, with sales increasing an average of 11% across the 42 categories examined. Sales rose in more than two-thirds of these categories, with nearly half experiencing an increase of 10% or more; 75% of households increased their overall expenditures after the cut in SKUs. In turn, we examined how different types of SKU reductions -- defined by how the cuts affect the available attributes or features of a category (e.g., the number of brands) -- af...
Shows that the assumption of simple scalability in most probabilistic analyses of choice is inadequate on both theoretical and experimental grounds. A more general theory of choice based on a covert elimination process is developed in which each alternative is viewed as a set of aspects. At each stage in the process, an aspect is selected (with probability proportional to its weight), and all the alternatives that do not include the selected aspect are eliminated. The process continues until all alternatives but 1 are eliminated. It is shown that this model (a) is expressible purely in terms of the choice alternatives without any reference to specific aspects, (b) can be tested using observable choice probabilities, and (c) generalize the choice models of R. D. Luce (see PA, Vol. 34:3588) and of F. Restle (see PA Vol. 36:5CP35R). Empirical support from a study of psychophysical and preferential judgments is presented. Strategic implications and the logic of elimination by aspects are discussed. (29 ref.)
Consumers rank variety of assortment right behind location and price when naming reasons why they patronize their favorite stores. Consumers care about variety because they are more likely to find what they want when going to a store that offers more varied assortments. When tastes are not well formed or are dynamic, perceived variety matters even more because of the desire to become educated about what is available while maintaining flexibility. Variety perception also matters when the variety-seeking motive operates. Retailers care about variety because customers value variety. Therefore, it is important to understand how people perceive the variety contained in an assortment and how these perceptions influence satisfaction and store choice. Remarkably, except for a recent study by Broniarczyk et al. (1998), there has been no research aimed at understanding the variety perception process itself.
We offer a general mathematical model of variety based on the complete information structure of an assortment, defined both by the multiattribute structure of the objects and their spatial locations. We impose a psychologically plausible set of restrictions on the general model and obtain a class of simpler estimable models of perceived variety. We utilize the model to develop assortments that vary widely in terms of their information structure and study the influence of three factors on variety perceptions: (a) information structure of each assortment (i.e., the attribute level differences between objects); (b) level of organization of the objects and hence their relative spatial positions; and (c) task orientations, promoting either analytic or holistic processing. We also investigate the influence of variety perception and organization on stated satisfaction and store choice. To summarize our major findings:
1. Information structure has a big impact on variety perceptions, though diminishing returns accompany increases in the number of attributes on which object pairs differ.
2. People are more influenced by local information structure (adjacent objects) than nonlocal information structure. Proximity matters.
3. Organization of the display can either increase or decrease variety perceptions. When people engage in analytic processing, organized displays appear to offer more variety. When processing is holistic, random displays are seen as more varied.
4. Both variety perceptions and organization drive stated satisfaction and store choice. People are more satisfied with and likely to choose stores carrying those assortments that are perceived as offering high variety and that are displayed in an organized rather than random manner.
Our work provides a basic framework for thinking about variety. By helping retailers to understand the factors that drive variety perception, it may be possible to design more efficient, lower cost assortments without reducing variety perceptions and the probability of future store visits.
Reflecting the importance of variety-seeking in consumer choice, there has been an explosion of research in the marketing literature on this topic in the past decade. The goal of this paper is to provide an integrative review of the key findings. In particular, a conceptual, integrating framework for understanding the reasons why consumers seek variety is presented. Within this context, the implications of this research for retail and service management are discussed as well as a review of the measurement tools and predictive models of variety-seeking that have been proposed in the last decade.
Research in decision making often assumes that corresponding dimensions or features of choices are compared. At the same time, recent models of similarity comparison stress the importance of structural alignment and associated inference processes. The present studies integrate these perspectives by examining feature listings and choices for pairs of video games varying in their comparability. In the first study, one group of participants simply compared pairs of games and listed commonalities and differences. Another group made selections between games and provided justifications for their decisions. We observed close correspondences between justifications and feature listings across wide variation in comparability. In addition, the justifications systematically favored comparable over noncomparable properties. Features also seemed to be created or inferred to promote alignability. The second study manipulated the comparability of individual properties. Here, justifications were more likely to include a property when it was comparable than when it was noncomparable. These observations suggest a constructive alignment process common to similarity and choice.
An asymmetrically dominated alternative is dominated by one item in the set but not by another. Adding such an alternative to a choice set can increase the probability of choosing the item that dominates it. This result points to the inadequacy of many current choice models and suggests product line strategies that might not otherwise be intuitively plausible.
Contrary to the common wisdom that more choice is always better, selections made from large assortments can lead to weaker preferences. Building on the extant literature, this research identifies ideal point availability as a key factor moderating the impact of assortment on choice. It is proposed that, in the case of large assortments, ideal point availability can simplify choice, leading to a stronger preference for the selected alternative. In contrast, for choices made from smaller assortments, ideal point availability is proposed to have the opposite effect, leading to weaker preferences. Data obtained from four experiments lend support for the theory and the empirical predictions advanced in this article. Copyright 2003 by the University of Chicago.
The traditional focus in the decision‐making literature has been on understanding how consumers choose among a given set of alternatives. The notion that preference uncertainty may lead to choice deferral when no single alternative has a decisive advantage is tested in seven studies. Building on recent research, the article shows that the decision to defer choice is influenced by the absolute difference in attractiveness among the alternatives provided and is not consistent with trade‐off difficulty or the theory of search. These findings are then extended to show that choice deferral can also be modified for the same alternatives by manipulations that make them appear more similar in attractiveness, or that decrease the need to differentiate among them. The results are consistent with the notion that preference uncertainty results in a hesitation to commit to any single action since small differences in attractiveness among the alternatives are potentially reversible. Consistent with this premise, the effect of attractiveness difference on choice deferral decreased significantly when subjects were first allowed to practice making monetary trade‐offs among the available alternatives.
Current psychological theory and research affirm the positive affective and motivational consequences of having personal choice. These findings have led to the popular notion that the more choice, the better-that the human ability to manage, and the human desire for, choice is unlimited. Findings from 3 experimental studies starkly challenge this implicit assumption that having more choices is necessarily more intrinsically motivating than having fewer. These experiments, which were conducted in both field and laboratory settings, show that people are more likely to purchase gourmet jams or chocolates or to undertake optional class essay assignments when offered a limited array of 6 choices rather than a more extensive array of 24 or 30 choices. Moreover, participants actually reported greater subsequent satisfaction with their selections and wrote better essays when their original set of options had been limited. Implications for future research are discussed.
Most choice models in marketing implicitly assume that the fundamental unit of analysis is the brand. In reality, however, many more of the decisions made by consumers, manufacturers, and retailers occur at the level of the stock-keeping unit (SKU). The authors address a variety of issues involved in defining and using SKUs in a choice model, as well as the unique benefits that arise from doing so. They discuss how a set of discrete attributes (e.g., brand name, package size, type) can be used to characterize a large set of SKUs in a parsimonious manner. They postulate that consumers do not form preferences for each individual SKU, per se, but instead evaluate the underlying attributes that describe each item. The model is shown to be substantially superior to a more traditional framework that does not emphasize the complete use of SKU attribute information. Their analysis also highlights several other benefits associated with the proposed modeling approach, such as the ability to forecast sales for imitative line extensions that enter the market in a future period. Other implications and extensions also are discussed.
Determinants of retail patronage were identified and compared in a series of analyses of covariance of multinomial logit parameters. These parameters, estimated from random samples drawn from six North American and European markets over a seven-year period, revealed insignificant seasonal changes in a single market, significant changes in a single market over the seven years, and significant differences between markets and across cultures.
Prior research has focused on early entrant advantage rather than on theories that explain and predict how late entrants can surpass the early entrant's performance. In this research, the authors propose that learning about new brands is influenced by the way the attributes of later entrants compare with attributes of the first. In three experiments, the authors show that attributes that differentiate later entrants from the first entrant are better remembered and listed more often in judgment formation protocols if the attributes are comparable along some common aspect (i.e., they are alignable differences) than if they do not correspond to any attributes of the first entrant (i.e., they are nonalignable differences). The impact of greater memorability of alignable over nonalignable differences is that later entrants whose attributes are superior to those of the first entrant can come to be preferred over the first entrant when the attributes are alignable differences but not when they are nonalignable differences. These findings have important implications for product entry, differentiation, and positioning strategies.
Grocery retailers have been informed that, to remain competitive, they must reduce the number of stockkeeping units (SKUs) offered, in line with consumer demand, or, in other words, adopt "Efficient Assortment." Retailers have resisted this principle on the basis of a fear that eliminating items would lower consumer assortment perceptions and decrease the likelihood of store choice. In two studies, the authors examine how consumers form assortment perceptions in the face of SKU reduction with a particular emphasis on two heuristic cues: the availability of a favorite product and the amount of shelf space devoted to the category. Results indicate that retailers might be able to make substantive reductions in the number of items carried without negatively affecting assortment perceptions and store choice, as long as only low-preference items are eliminated and category space is held constant. Thus, the potential risk inherent in item reduction might be more limited than initially thought. The authors then discuss the implications of these findings for retailers, as well as additional measurement considerations.
Choice often produces conflict. This notion, however, plays no role in classical decision theory, in which each alternative is assigned a value, and the decision maker selects from every choice set the option with the highest value. We contrast this principle of value maximization with the hypothesis that the option to delay choice or seek new alternatives is more likely to be selected when conflict is high than when it is low. This hypothesis is supported by several studies showing that the tendency to defer decision, search for new alternatives, or choose the default option can be increased when the offered set is enlarged or improved, contrary to the principle of value maximization.
Consumer choice is often influenced by the context, defined by the set of alternatives under consideration. Two hypotheses about the effect of context on choice are proposed. The first hypothesis, tradeoff contrast, states that the tendency to prefer an alternative is enhanced or hindered depending on whether the tradeoffs within the set under consideration are favorable or unfavourable to that option. The second hypothesis, extremeness aversion, states that the attractiveness of an option is enhanced if it is an intermediate option in the choice set and is diminished if it is an extreme option. These hypotheses can explain previous findings (e.g., attraction and compromise effects) and predict some new effects, demonstrated in a series of studies with consumer products as choice alternatives. Theoretical and practical implications of the findings are discussed.
This survey is divided into three major sections. The first concerns mathematical results about the choice axiom and the choice models that devoIve from it. For example, its relationship to Thurstonian theory is satisfyingly understood; much is known about how choice and ranking probabilities may relate, although little of this knowledge seems empirically useful; and there are certain interesting statistical facts. The second section describes attempts that have been made to test and apply these models. The testing has been done mostly, though not exclusively, by psychologists; the applications have been mostly in economics and sociology. Although it is clear from many experiments that the conditions under which the choice axiom holds are surely delicate, the need for simple, rational underpinnings in complex theories, as in economics and sociology, leads one to accept assumptions that are at best approximate. And the third section concerns alternative, more general theories which, in spirit, are much like the choice axiom. Perhaps I had best admit at the outset that, as a commentator on this scene, I am quali- fied no better than many others and rather less well than some who have been working in this area recently, which I have not been. My pursuits have led me along other, somewhat related routes. On the one hand, I have contributed to some of the recent, purely algebraic aspects of fundamental measurement (for a survey of some of this material, see Krantz, Lute, Suppes, & Tversky, 1971). And on the other hand, I have worked in the highly probabilistic area of psychophysical theory; but the empirical materials have led me away from axiomatic structures, such as the choice axiom, to more structural, neural models which are not readily axiomatized at the present time. After some attempts to apply choice models to psychophysical phenomena (discussed below in its proper place), I was led to conclude that it is not a very promising approach to, these data, and so I have not been actively studying any aspect of the choice axiom in over 12 years. With that understood, let us begin.
Considering the number of new product introductions and available product varieties today, the practice of product proliferation is visibly evident in many diverse industries. Given its prevalence in practice, understanding the determinants and implications of firm proliferation strategies clearly has important managerial relevance.
Previous theoretical research has identified three primary effects of a proliferation strategy: (1) a broad product line can increase the overall demand faced by the firm, (2) a broad product line can affect supply by increasing costs, and (3) broad product lines can have strategic consequences (e.g., long product lines can deter entry, thereby allowing an incumbent firm to raise prices). However, despite the theoretical interest in this common business practice, there has been very little empirical research on this topic. Moreover, no empirical study has simultaneously considered all three of the possible effects associated with a proliferation strategy. Consequently, in this paper we propose a three-equation simultaneous system that captures both the determinants and market outcomes of a firm's product line decisions. In particular, we specify market share, price, and product line length equations, which are estimated by three stage least squares. Using this structure, we empirically study the personal computer industry over the period 1981–1992.
Our empirical results demonstrate that proliferation strategies do not have a uni-dimensional explanation. We find that product proliferation decisions have both demand (market share) and supply (price) implications. Our empirical results also suggest that the firm-level net market share impact of product proliferation in the personal computer industry is negative (i.e., the cost increases associated with a broader product line dominate any potential demand increases). As expected, we find that structural competitive factors play an important role in the determinants and market outcomes of a firm's product line decisions. However, we do not find evidence of firms using proliferation strategies to deter entry in this industry. Finally, we also demonstrate that some of the empirical conclusions from previous research are reversed once product line length is specified as endogenous in the share and price specifications.
Studying product variety is an interesting and relevant area for research. Work in this area should build on careful understanding
of both customers’ reactions to it and managers’ decision making with respect to it. This requires an interdisciplinary focus,
drawing on work in information processing, channels, operations management, game theory, and managerial decision making. In
fact, the major advances may come more from combining knowledge from the different areas rather than boring more deeply into
a single one.
Retailers who implement a high variety strategy need to ensure that customers are not confused with the complexity inherent in a wide assortment of options. Experimental evidence shows that when asking consumers to choose among items in a wide assortment, both the way the information is presented and the type of customer input to the information gathering process influence customer satisfaction. First, asking consumers to indicate their within-attribute preferences through an attribute-based information format, as opposed to an alternative-based format, increases satisfaction and learning. Second, consumers are likely to be more satisfied and perceive less complexity in the choice set when they are asked to explicitly indicate their preferences within each attribute, as compared to more effortful tasks or less effortful tasks.
Shelf management is a difficult task in which rules of thumb rather than good theory and hard evidence tend to guide practice. Through a series of field experiments, we measured the effectiveness of two shelf management techniques: “space-to-movement,” where we customized shelf sets based on store-specific movement patterns; and “product reorganization” where we manipulated product placement to facilitate cross-category merchandising or ease of shopping. We found modest gains (4%) in sales and profits from increased customization of shelf sets and 5–6% changes due to shelf reorganization. Using the field experiment data, we modeled the impact of shelf positioning and facing allocations on sales of individual items. We found that location had a large impact on sales, whereas changes in the number of facings allocated to a brand had much less impact as long as a minimum threshold (to avoid out-of-stocks) was maintained.
Strategic market planning -- Industrial marketing -- Research for marketing decisions -- Global marketing management -- Marketing management -- Strategic marketing for nonprofit organizations -- Principles of marketing -- Services marketing -- Marketing research and knowledge development -- The strategy and tactics of pricing -- Kleppner's advertising procedure -- Marketing channels -- Legal aspects of marketing strategy -- Design and marketing of new products
A theory and methodology are developed for explicitly considering the cost of comparing diverse choice alternatives. The theory allows (1) explicit analytical measures of the cost of using various simplified decision strategies, and (2) predictions regarding the distribution of mistakes a consumer is likely to make when reducing decision-making effort.
Building on previous research, this article proposes that choice behavior under preference uncertainty may be easier to explain by assuming that consumers select the alternative supported by the best reasons. This approach provides an explanation for the so-called attraction effect and leads to the prediction of a compromise effect. Consistent with the hypotheses, the results indicate that (1) brands tend to gain share when they become compromise alternatives in a choice set; (2) attraction and compromise effects tend to be stronger among subjects who expect to justify their decisions to others; and (3) selections of dominating and compromise brands are associated with more elaborate and difficult decisions.
Research on consumer choice has focused on easily comparable alternatives, a subset of the choices consumers regularly face. This paper outlines the problem and two general strategies for comparing noncomparable alternatives, a subset of choices that has been overlooked in the literature. Experiments are reported that support use of the strategies.
This research investigates how choice-process satisfaction is influenced by limitation of choice option and by the types of features used to represent the options. Studies of choice satisfaction have focused on how satisfied the decision maker feels about the choice that has been made and have overlooked the importance of the process through which the decision maker makes a choice, i.e., choice-process satisfaction. We show that the comparability of choice options through alignable features increases choice-process satisfaction, whereas option limitation (i.e., making one option unavailable from a set of equally attractive options) decreases choice-process satisfaction. Further, this decrease in satisfaction, relative to all options being available, occurs for people who are given a set of options in which the difference features are alignable (i.e., differences of a corresponding dimension) but not for people who are given a set of options in which the difference features are nonalignable (i.e., differences of unique dimensions). We propose that alignable differences are easier to compare and have more weight in people's attribute processing, and thus give rise to a perception of a greater amount of information about the option set that is relevant for choice. Making an option unavailable in this case would have a bigger impact than in a situation in which all options have nonalignable differences. Nonalignable differences are difficult to process and are less likely to make people aware that there is very much information about the options for decision making. This explanation and the interaction effect between option limitation and feature alignability are tested in four experiments. Copyright 1999 Academic Press.
Future Shock. Random House
- Toffler
- Alvin
Toffler, Alvin. 1970. Future Shock. Random House, New York.
Simplicity Marketing
- Cristol
- M Steven
- Peter
- Sealey
Cristol, Steven M., Peter Sealey. 2000. Simplicity Marketing. The Free Press, New York.