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Overchoice and Assortment Type: When and Why Variety Backfires

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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.

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... Personalization and variety are highly sought after and well-received. The economy thrives, the consumer has his needs and wants met, and suppliers battle for a bigger market share in search of profit [9]. ...
... This variable is generated by some elements, as found in the literature, such as: -Overwhelmingness: when consumers face45 an overwhelming number of choices, they are crippled by the large number of variables they have to cope with when making a decision [15]; -Assortment size: smaller choices in the context of a bigger choice would ultimately lead up to the final choice, through the means of groups and subgroups. It could be a way to preserve assortment size and minimize negative affect [4]; -Evaluation costs and product diversity: increased cognitive efforts, as well as the increased probability of regret that can be associated with a large assortment, as it implies high evaluation costs and high regret anticipation [9]; Different terms were found, such as "analysis paralysis" or "paralysis by analysis" which involve overanalyzing or overthinking so that an action or a decision is ultimately not taken, resulting in paralyzing the outcome [16]. Decision paralysis was identified as a situation where the opportunity cost of decision analysis exceeds the benefits that could be gained by enacting some decision [16]. ...
... -Regret anticipation: there is a conflict intrinsic to the assortment of a brand, related to either reducing the number of alternatives or potential regret, or to simplify information processing [9]; -Overthinking: an individual situated in the scenario of having to make a decision might feel compelled to find an optimal solution and, because they fear an erroneous outcome, they never finish looking for that perfect solution [15]; -Maximizing/satisficing: consumers can be sorted into two categories based on their choice-making: satisficers and maximizers. There are findings that suggest that maximizers and satisficers suffer regret in a similar way when considering comparable alternatives in a concrete mindset, and noncomparable alternatives in an abstract mindset. ...
Article
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Time and responses are vital to the process of decision-making. It is a common assumption that having a wide array of options from which to choose is a good thing, but is that truly the case? This research aims to investigate the consumer’s reaction to the increasing number of choices available (which will be referred to as choice overload, or overchoice); more precisely, if it is related to paralysis concerning decision-making. To obtain structured and relevant results, the study is an intergenerational one, endeavoring to compare the outcomes across three different generations (Generations X, Y, and Z) and across their genders. It also aims at identifying trends, if any should arise, pertaining to the matter of overchoice. A survey was conducted among 396 respondents from Iasi, Romania, and the questionnaire is presented in the annex. The main results indicate that product overchoice is real but is more significant in terms of generational point of view rather than that of gender. The findings fill a knowledge gap on the relationship between choice overload and decision paralysis.
... Moreover, assortment alignability has mainly been considered along a unique attribute, of being alignable or nonalignable Mejía et al. Journal of Retailing and Consumer Services xxx (xxxx) (Gourville and Soman, 2005;Lee and Lee, 2016;Som and Lee, 2012), which limits ecological validity. On markets, assortments are neither purely alignable nor nonalignable (Griffin and Broniar czyk, 2010;Herrmann et al., 2009), but rather are a mix and vary along several attributes of any type, as can be observed in many product categories (Fasolo et al., 2009). ...
... Our results complement research on perceived variety (Deng et al., 2016;Kahn and Wansink, 2004;Szrek, 2017;Townsend and Kahn, 2014;Wen and Lurie, 2019) by showing how assortment size and alignability influence perceived variety. Contrary to many studies which consider nonalignable rather than alignable assortments, as detrimental because they lead to regrets and complexity during choice processes (Gourville and Soman, 2005;Markman and Loewenstein, 2010;Som and Lee, 2012;Sun et al., 2018), we establish that nonalignable assortments can have a positive impact on perceived assortment variety. Our results have direct implications for store and brand-line assortment management. ...
... Assortment organization, considered along alignable or nonalignable attributes, has proven to have systematic impacts on various aspects of consumers' behavior. This includes product memorization Zhang and Markman, 1998), choice process duration (Herrmann et al., 2009), share of choice (Gourville and Soman, 2005) and satisfaction (Griffin and Broniarczyk, 2010). However, studies on assortment alignability mainly focus on choice (i.e. ...
Assortment size is considered to influence strongly perceived assortment variety, but this influence depends on assortment organization. We consider assortment alignability (i.e. the degree of comparability between products) and show how it interacts with size to influence perceived variety. When assortment is structured along a unique important attribute (e.g. flavor or format), alignability influences perceived variety but size does not (Study 1). When this attribute is not important, only size influences perceived variety (Study 2). When assortment is struc-tured along several attributes (e.g. flavor and format), alignability positively influences perceived variety, and assortment size reinforces this effect (Study 3).
... This shift in focus may result in a reversal of choice overload. Conversely, less-involved consumers will experience increased decision difficulty when confronted with larger sets because they require more cognitive effort to evaluate options [10,11], displaying choice overload. Even though in the current research we examine consumers' responses with low cause involvement, the focus is on consumers with high cause involvement, as targeting socially conscious consumers and building a relationship with them is an integral part of social enterprises' marketing practice [12]. ...
... For example, consumers who selected a chocolate from 30 options felt the decision process was more difficult and frustrating than did consumers who chose from a limited set of six options [6]. When there are many options to choose from, consumers go through a greater number of comparisons to find the best option, which increases the cognitive effort that goes into making the choice [10,11]. As decision difficulty is closely related to the cognitive effort required to process many options [19,20], previous literature has suggested moderators that reduce cognitive effort or direct the focus of effortful comparison [10,[23][24][25]. ...
... When there are many options to choose from, consumers go through a greater number of comparisons to find the best option, which increases the cognitive effort that goes into making the choice [10,11]. As decision difficulty is closely related to the cognitive effort required to process many options [19,20], previous literature has suggested moderators that reduce cognitive effort or direct the focus of effortful comparison [10,[23][24][25]. Extending the literature on moderators of choice overload, we investigate cause involvement as a potential moderator in the context of social enterprise. ...
Article
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Social enterprises aim to achieve both social and economic goals by reaching broader consumer segments through extensive assortments, but research into how this product proliferation strategy affects consumer response is scarce. In the current research we examine how consumers judge social enterprises providing large product assortments. Three experiments show that choice overload (i.e., having a decision difficulty when faced with many options) can be reversed among target consumers of social enterprises—specifically those whose involvement in a social cause is high. Because more-involved consumers view large assortments of cause-related products as an indicator of the company’s commitment to addressing social issues, they identify with the company and thereby form communal relationships. Thus, the consumers’ focus shifts from comparing options to helping the company, leading to reduced decision difficulty. The findings contribute to existing research on assortment size and the understanding of the information consumers use to evaluate the company’s commitment to social causes.
... Davis, Golicic & Boerstler 2011). Mixed method has been used in marketing in the domains such as product choice(Berger & Fitzsimons 2008;Gourville & Soman 2005), consumer experience(Gourville & Soman 2005;McKinney, Yoon & Zahedi, 2002;Park, Mothersbaugh & Feick 1994),Branding(Berger, Draganska & Simonson 2007), consumer possession(Bearden & Rose 1990; ...
... Davis, Golicic & Boerstler 2011). Mixed method has been used in marketing in the domains such as product choice(Berger & Fitzsimons 2008;Gourville & Soman 2005), consumer experience(Gourville & Soman 2005;McKinney, Yoon & Zahedi, 2002;Park, Mothersbaugh & Feick 1994),Branding(Berger, Draganska & Simonson 2007), consumer possession(Bearden & Rose 1990; ...
Thesis
Previous research has highlighted that behavior is the result of both individual and situational factors. Therefore, consideration of both these factors is importantto better understand and predict human behavior. Despite this, extant literature is replete with studies which have mostly focused on studying the influence of either individual or situational factors on behavior. Given the (i) increased complexity faced by marketers due to greater number of product and channel options at different stages of customer decision journey (ii) premise involving the importance of studying both individual and situational factors to understand behaviour (iii) paucity of research involving customer decision journey and channels from the regulatory focus theory perspective, this thesis aims to provide a nuanced understanding of customer behavior from a multi-channel and customer decision journey perspective grounded in regulatory focus theory. It provides a rich customer behaviour understanding during different stages of customer decision journey based on chronic and situational regulatory orientation interaction. It provides answers to the “why” (regulatory focus theory), of “what” (means and emotions) and “where” (CDJ and channel context) questions(Ratneshwar, Mick & Huffman 2003). Specifically, this research aims to determine the influence of chronic and situational regulatory focus interaction on the choice of means and emotions faced at each stage of cutomer decision journey. For instance, what means (e.g. channels) will be chosen and what emotions will be experienced in case of chronic promotion person facing promotion situation?A mixed method approach is adopted for this thesis. The first qualitative phase involved in-depth interviews with 30 multi-channel customers. The results of this phase indicated differences in channel choice, actions taken at channels and emotions experienced at each stage of the customer decision journey among the chronic and situational regulatory orientationsinteractiongroups. The results of the first phase helped in the design of second experimental phase. This experiment was conducted in lab settingwith the aim of identifying chronic and situational regulatory focus interaction on the online customer decision journey. The first two stages provide complementarity. The results of the lab session indicate a significantinfluence of incongruent chronic-situation regulatory condition on the basket amount, significant promotion chronicsituation congruent condition on session duration and significant prevention chronic-situation congruent condition on the overall extensiveness of search and comparison. The third phase involved 14 interviews with experts from different industries. These experts highlighted the channel choices and actions of their customers. The experts also explained their implemented marketing strategies for each customer decision journey stage. The results indicate greater focus on push online marketing and separate rather than an integrated focus on each channel. This thesis contributes towards consumer behavior, regulatory focus theory and mixed method literature. It helps obtain a rich understanding of the role of both chronic and situational regulatory orientation on the channel choices and actions taken at these channels during different stages of customer decision journey. This may help marketers in targeting, channel and messagedesign. The results emphasize that marketers must use a combination approach in online channel design, involving usage of visuals and information. Product category may provide further guidance regarding the extent of trade-off between one type of design overanother. The strengths and limitations related to each stage are also provided.
... There are also many concerns about excessive choice. Research exists on choice overload (Chernev, Böckenholt, and Goodman 2015;Iyengar and Kamenica 2010;Scheibehenne, Greifeneder, and Todd 2010), where consumer psychologists studied the negative cognitive and emotional consequences of what marketing scholars would come to call overchoice environments (e.g., Gourville and Soman, 2005). There are also explorations on the paradoxes of choice (Fırat 1993;Jafari 2013;Marshall and Meiselman 2006;Redmond 2005), where consumer choice experiments revealed that too much of a good thing, viz., choice, could be as bad as not enough choice (Schwartz, 2004). ...
... There is also research on the difficulty and soundness of choicemaking (Ariely 2008;Cho, Khan, and Dhar 2013;Parker and Schrift 2011), and on the susceptibility of individuals to choose options that are framed in certain ways. These various concerns are primarily raised to ensure that choices can ideally be well thought out, satisfying, confident, regret-free, and stable (Ariely 2008;Gourville and Soman 2005;Sela and Berger 2012). What has been rarely challenged in these or other analyses is the foundational role of macro-influences (economic, political, social) on consumer choicemaking (for an exception, see Fırat and Dholakia 1982). ...
Article
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Technologies, especially Internet-based digital ones, are reshaping choice processes-actual considerations and actions, as well as perceptions of these-in massive, often fundamental, ways. In this paper, our goal is to explore choice processes in general, and especially choice processes in hyperdigital marketspaces (i.e., with massively, pervasively interconnected things) with examples drawn from U.S. macro consumption contexts. We start with a short review of discourses on choice and choicelessness and then shift to the emerging era of technology-shaped choice processes that are especially observable in contemporary hyperdigital marketspaces. For the increasingly large swaths of market segments that consume, indeed live, digitally, we find deft symbolic sublimations and inversions happening, wherein manipulation is perceived as autonomy enhancing.
... Sarver, 2008). Indeed, an individual anticipating regret can have a desire to face smaller menus, so as to reduce the possibility that her choice is ex post inferior to an alternative (Iyengar and Lepper, 2000;Gourville and Soman, 2005;Sarver, 2008). Symmetrically, anticipating elation generates a preference for having larger menus, so as to increase the possibility that the selected option is ex post superior to an alternative. ...
... With ex post resolution of uncertainty, greater variety can backfire (e.g. Iyengar and Lepper, 2000;Gourville and Soman, 2005;Diehl and Poynor, 2010), but anticipated elation could offset regret, making variety valuable, and thus explaining the variety puzzle. ...
Technical Report
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This paper introduces and characterizes behaviorally a model of choice over menus of options in which the individual experiences regret or elation if, after uncertainty is resolved, the choice from the menu is inferior or superior to available alternatives. The revealed preference characterization of the model combines two contrasting forces: a preference for having fewer options to reduce ex post regret, and a preference for having more options to increase ex post elation. The model provides predictions about the optimal design of assortments, sheds new light on choice deferral, and illustrates the underappreciated role of anticipated elation in explaining some puzzling behaviors. Indeed, the latter offers (1) an explanation for the variety puzzle in consumer behavior, (2) a justification for the intrinsic value of retaining decision rights, and (3) a rationalization for a preference for including unchosen or dominated options in a menu, even in the absence of temptation and context-dependency. Lastly, the model shows that instrumental information is always valuable to individuals anticipating regret and elation.
... In fact, the N-EM option becomes a way for participants 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). ...
... This result is contrary to the common belief in the earmarking literature. However, this finding could be explained by the theory of choice deferral, which 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, who knows best how to make use of the donation. ...
... Ideally, information creates knowledge, which overcomes misconceptions, and positively influences individual decision-making. Yet, an overload of information is likely to result in higher cognitive load, and suboptimal choices (Gourville and Soman, 2005), especially when consumers take decisions under time pressure (Sanjari et al., 2017). Hence, to change behavior via improving knowledge, one needs to balance the type and volume of information. ...
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A shift to more sustainable diets is needed to ensure food security and to reduce the pressure on the environment. Yet, many consumers have misconceptions about the environmental impacts of their diets and lack knowledge on how to prepare sustainable meals. This study uses a mixed-methods approach to develop four information nudges and to test their impact on dietary choices among a representative sample of Dutch consumers. A 2x2 between-subjects design crossing type of information (procedural versus declarative) with type of impacts (health versus environmental) is applied. The environmental impact is measured in terms of CO2 emissions, land use and water use. We find that pre-intervention knowledge about sustainable or healthy diets is related to the sustainability of participants' dietary choices. Procedural knowledge on how to prepare a healthier meal has the greatest potential to influence dietary behavior, in particular for participants without prior self-reported dietary restrictions.
... Ideally, information creates knowledge, which overcomes misconceptions, and positively influences individual decision-making. Yet, an overload of information is likely to result in higher cognitive load, and suboptimal choices (Gourville & Soman, 2005), especially when consumers take decisions under time pressure (Sanjari et al., 2017). Hence, to change behavior via improving knowledge, one needs to balance the type and volume of information. ...
Article
Full-text available
A shift to more sustainable diets is needed to ensure food security and to reduce the pressure on the environment. Yet, many consumers have misconceptions about the environmental impacts of their diets and lack knowledge on how to prepare sustainable meals. This study uses a mixed-methods approach to develop four information nudges and to test their impact on dietary choices among a representative sample of Dutch consumers. A 2 × 2 between-subjects design crossing type of information (procedural versus declarative) with type of impacts (health versus environmental) is applied. The environmental impact is measured in terms of CO2 emissions, land use and water use. We find that pre-intervention knowledge about sustainable or healthy diets is related to the sustainability of participants’ dietary choices. Procedural knowledge on how to prepare a healthier meal has the greatest potential to influence dietary behavior, in particular for participants without prior self-reported dietary restrictions.
... Examples given include 'Top N' whereby a decision maker only considers the top N options according to a limited number of qualities of their choices, such as only choosing from a set of cars that are your favourite color or preferred number of cup-holders (Rubinstein & Salant, 2006). 'Top on each' describes a decision maker as considering only the optimal options for each of the features when considered alone (Gourville & Soman, 2005) such as choosing between two cars, one with your preferred number of miles driven, and one with your preferred number of doors. 'Rationalization' is described by a decision maker subjectively selecting one or a few features to consider, and rationalizing their preference by selecting the option that optimizes only these features, such as choosing the single car that has your favourite color and number of doors, and not taking into consideration any other car (Cherepanov et al., 2013). ...
... The product assortment is the portfolio of the products offered to the consumers. Product assortment satiates the heterogeneous needs and the urge of variety-seeking in consumers (Gourville and Soman, 2005;Kahn, 1995). It gives consumers flexibility and the opportunity to enjoy different product variants suitable for specific occasions. ...
Consumers’ outlook towards acquisition-based consumption is changing, and the importance of ownership is fading. Using the stimulus-organism-response framework and a total of 302 responses, this study employed partial least squares structural equation modelling (PLS-SEM) to examine the role of de-ownership orientation in the adoption of access-based services. The results show that de-ownership orientation positively influences access-based services’ attitude and adoption intention. Further, it shows that stimuli such as ownership burden, economic benefits, environmentalism, and product scarcity risk influence de-ownership orientation. The findings contribute to understanding this emerging phenomenon of sharing economy.
... When increasing the assortment for a brand or a category, the increased cognitive load a consumer faces may result in choice deferral and hence lower profits. 9 Lastly, scanner data has been used in this research. A key benefit of using such data is the accurate reflection of consumer behaviour this provides. ...
... However, the appearance of new and more complex customer dynamics has created additional challenges to delivering excellence in customer service. For example, manufacturers have enlarged customer assortments, thereby increasing operational costs, and making consumer choices more difficult (Gourville and Soman, 2005). Similarly, the availability of more and better product information, as well as customer reviews, creates higher expectations that are sometimes difficult to fulfill (Floyd et al., 2014). ...
The design of satisfactory shopping experiences remains one of the main challenges for building long-term profitability in modern retailing. Therefore, companies are interested in identifying the key drivers of the service execution that shape customer shopping satisfaction. In this study, we developed a standardized questionnaire for evaluating the shopping experience, and conducted a large study in several grocery stores across different formats during a time span of five years. The resulting rich dataset enabled us to uncover interesting patterns using both individual and store-level analyses. Our results indicate that larger store formats are associated with greater satisfaction levels. When looking at the marginal effects of the various elements of customer service, we found that some specific elements of service execution present significant differences across store formats. In addition, we identified loss aversion on shopping experience, since poor performance impacts more on customer satisfaction than superior performance. Finally, our store-level analysis sheds light on how changes in the service performance determine changes in the shopping experience in the same store. These implied results may guide store and chain managers to evaluate the role of the store execution elements better, and to design the customer shopping experience successfully.
... In fact, an excessive number of options can produce the overchoice effect, making it difficult to make a decision, as it is explained by the choice overload theory, widely used in the management and economics research fields (see Iyengar & Lepper, 2000;Mogilner et al., 2008;Reutskaja & Hogarth, 2009). Consequently, this effect may negatively impact the purchase action of the backers (Gourville & Soman, 2005). Consequently, we formulate the following hypothesis: ...
Article
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This article analyzes the determinants of successful crowdfunding initiatives using a sample of 5,251 projects from the reward-based Spanish platform Verkami. In contrast to most of the literature that has measured success with a dichotomous variable, we approach success with a continuous one, namely the ratio of achievement, which is measured as the obtained resources over the total amount requested by the promoter. We consider a set of potential determinants of success, which are theoretically well-grounded and cover a variety of spheres related to project features. Results suggest that factors related to the signaling theories such as partnership, having previous experience and interaction with backers are positively associated with the achievement ratio, whereas no significant impact is found for the number of rewards. In addition, we find uneven effects for low and high ratios of achievement, identifying the key determinants in different project stages. JEL CLASSIFICATION D26; G29; L26; L86; M13; M21
... For one, intertemporal choice structures have shown that when individuals judge alternative choices, their decision making is prone to be biased when evaluating alternatives one at a time. Contrary as standard utility theory would predict, presenting joint alternatives concurrently changes decision making outcomes towards people becoming more likely to make more rational choices (Bazerman & Moore, 2009;Gourville & Soman, 2005;Tversky & Shafir, 1992). A natural tendency towards evaluating choices jointly rather than separately improves the quality of decisions as it alleviates complexity and allows to trade-off alternatives directly (Bazerman, Loewenstein, & White, 1992;Bazerman, Moore, Tenbrunsel, Wade-Benzoni, & Blount, 1999;Irwin, Slovic, Lichtenstein & McClelland, 1993;Kahneman & Ritov, 1994). ...
Article
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Overall the following article innovatively paints a novel picture of the mass psychological underpinnings of business cycles based on information flows in order to recommend how certain communication strategies could counterweight and alleviate the building of disastrous financial market mass movements. Acknowledging that human beings are connected to and interact with each other in families, ties and larger networks of states, nations and intergovernmental institutions, studying the role of information in building socially-constructed economic correlates promises to explain how market outcomes are developed in the social compound and can be guided by media communication. Addressing problems of the neoclassical assumption of perfect information markets through the lens of ‘real competition,’ the following paper will specifically unravel how contemporary media communication produces certain types of price expectations that form consumption patterns leading to collectively-shared economic outcomes. An introduction to the history of economic cycles will lead to the analysis of the role of information in creating economic booms and busts in the age of globalization. Applying emergent risk theory onto economic fluctuations will serve as an innovative way to explain how and what information represented in the media creates economic ups and downs. Linguistic roots of news about the economy are aimed at shedding light on how media representations and temporal foci echo in economic correlates and shape market outcomes. As business cycles are a collective phenomenon, group interactions’ potential contribution to create business cycles will innovatively be outlined and the role of information flows among groups in creating price expectations unraveled. Business cycles will also be shown to obey some kind of natural complexity, as for being whimsically influenced by socio-historic and political trends. Recommendations how to create more stable economic systems by avoiding emergent risks and communicating market prospects more cautiously will be given in the discussion followed by a prospective future research outlook and conclusion.
... In particular, it is based on the assumption that large assortments, and in general more choices, increase individuals" cognitive resources and efforts required in order to evaluate the attractiveness and the value of each option. Consequently, more choices lead to weaker preferences and lower levels of satisfaction (Fasolo et al., 2007;Gourville & Soman, 2005;Scheibehenne et al., 2010). Embracing this second strand of literature, the present work intends to reinforce the theory according to which "less is more" and to fill a gap in the extant literature related to the methodology used, the number of alternatives proposed and the setting where the experiment takes place. ...
Article
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One of the most basic strategic decisions a retailer must take involves determining the product assortment to offer inside the store. Despite the importance of the topic, there are two opposite strands of literature that have come up with completely different points of view. To summarize them, the first one states that the more choices, the better, while the second one states that more choices lead to weaker preferences and lower levels of satisfaction. Furthermore, the majority of studies conducted so far have focused their attention on collecting self-report measures. However, it has been argued thet self-report measures, interviews and questionnaires may have strong biases. Specifically, they are a product of psychological, sociological, linguistic, experiential and contextual variables, which may have little to do with the construct of interest. Thus, the present work intends to enrich the extant literature about the effect of ‘choice overload’ on customer satisfaction and behavior inside the store by analyzing both cognitive and unconscious responses. In order to confirm our hypothesis, an experiment, involving 171 participants, was conducted in a laboratory supermarket in Milan to test the reactions in front of a regular pastry display and a display characterized by fewer options.
... Prior research has shown that too many customization options, as well as tradeoffs IJOPM 40,11 between attractive levels of different product attributes, may cause consumers to experience information overload and selection difficulty (e.g. Gourville and Soman, 2005). The existing literature also suggests that the COO cue may function as a simplifying heuristic for inferring product quality when the amount of information about intrinsic attributes is large and difficult to integrate (Hong and Wyer, 1989;Li and Wyer, 1994). ...
Article
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Purpose-The operational capability of mass customization (MC) allows consumers to obtain products tailored to their idiosyncratic needs. This study aims to provide insights into the potential of this capability for countering a product's liability of foreignness-the negative effect of the out-group status of a product's country of origin (COO) on consumers' evaluations of the product. Design/methodology/approach-Based on the social identity approach, it is hypothesized that this liability is reduced when a consumer product is mass-customized rather than standardized as per a mass-production strategy. This hypothesis is tested using a mixed between-and within-subject experiment. Findings-When evaluating mass-produced sneakers, native German-speaking (Italian-speaking) South Tyrolean consumers rated the quality of Italian (German) sneakers significantly lower than that of German (Italian) sneakers. However, when the sneakers were mass-customized, this difference in perceived product quality was non-significant for both groups of consumers, supporting the research hypothesis. Research limitations/implications-Future research could replicate this study in other samples, with other product types, COOs and countries of destination, as well as at different degrees of product customization. Practical implications-Business-to-consumer firms contemplating the development of their MC capability are made aware that the benefits of this operational capability might go beyond the typical advantages highlighted by the existing literature. Originality/value-This paper joins the discussion on MC value by offering a theoretical explanation and empirical support for another mechanism through which the operational capability of MC can create value, at least in business-to-consumer industries: by countering a product's possible liability of foreignness and thus increasing perceived product quality in export markets.
... What can we learn from diversification for nudging people into better choices?For one, intertemporal choice structures have shown that when individuals judge alternative choices, their decision making is prone to be biased when evaluating alternatives one at a time. Contrary as standard utility theory would predict, presenting joint alternatives concurrently changes decision making outcomes towards people becoming more likely to make more rational choices(Bazerman & Moore, 2008;Gourville & Soman, 2005;Tversky & Shafir, 1992). A natural tendency towards evaluating choices jointly rather than separately improves the quality of decisions as it alleviates complexity and allows to trade-off alternatives ...
Chapter
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In an impressive line of experiments and field studies, the growing field of behavioral finance has offered behavioral insights on how markets deviate from rationality. Human actors are prone to base their investment choices on very many other factors than simply volatility and profit maximization opportunities. Most recently nudging has started using the emerging insights about human heuristics and biases to improve decision making in different domains ranging from health, wealth and prosperity, which are covered in the following chapters. The following part reviews some of the behavior insights gained in the last decades and shows ways how to profit from heuristics and biases.
... Human beings on the other hand are different. They get overwhelmed by too much information and too many choices (Gourville & Soman, 2005), get emotional and stressed trying to make complex decisions, are often myopic and choose to act in order to maximise short-term happiness rather than longer-term outcomes (Thaler et al., 1997), and are cognitive misers and often lack the sophistication to do complex problem-solving activities (Simon, 1956). Econs respond well to information and instructions-give them complex instructions and they will comprehend and comply with it. ...
Article
Marketing departments, governments and policymakers all around the world have increasingly started embracing the field of behavioural sciences in improving the design of products and services, enhancing communications, improving managerial decision-making, encouraging desired behaviour by stakeholders and, more generally, creating a human-centric marketplace. Within organisations, the human resources management (HRM) function is perhaps the one place that acknowledges that humans are central to the organisation’s success, so it is critical that HRM too actively embraces the insights and methods of behavioural sciences. In this article, I provide an overview of the behavioural sciences, discuss how HRM can benefit from an in-depth knowledge of the science and illustrate specific examples from recruitment processes, training and communications, incentive design, employee-oriented processes, and diversity and inclusion initiatives that could benefit from evidence from behavioural sciences.
... What can we learn from diversification for nudging people into better choices?For one, intertemporal choice structures have shown that when individuals judge alternative choices, their decision making is prone to be biased when evaluating alternatives one at a time. Contrary as standard utility theory would predict, presenting joint alternatives concurrently changes decision making outcomes towards people becoming more likely to make more rational choices(Bazerman & Moore, 2008;Gourville & Soman, 2005;Tversky & Shafir, 1992). A natural tendency towards evaluating choices jointly rather than separately improves the quality of decisions as it alleviates complexity and allows to trade-off alternatives ...
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Behavioral Finance is one of the most novel developments in Behavioral Economics. Since the end of the 1970ies a wide range of psychological, economic and sociological laboratory and field experiments proved human beings deviating from rational choices. Standard neoclassical profit maximization axioms were outlined to fail to explain how human actually behave. Human beings were rather found to use heuristics in the day-to-day decision making. These mental short cuts enable to cope with information overload in a complex world. Behavioral economists proposed to nudge and wink citizens to make better choices for themwith many different applications in very many different domains. This paper reviews and proposes how to use mental heuristics, biases and nudges in the finance domain to profit from markets.
... However, several articles report that the magnitude of this growth tends to decrease as the number of variants increases (Bayus and Putsis, 1999;Wan et al., 2012;Wan and Dresner, 2015). Moreover, Gourville and Soman (2005) show across three studies that depending on the type of variety, product proliferation can even decrease the market share due to overchoice. Also, researchers state that product proliferation is subject to cannibalization (Wan et al., 2012;Wan and Dresner, 2015;Kekre and Srinivasan, 1990;Bayus and Putsis, 1999); Moreno and Terwiesch (2016), however, is the only paper that provides empirical evidence for this cannibalization. ...
Article
Managers are often inclined to maximize the utilization of production plants to compensate for the high fixed costs. Therefore, when marketing conditions justify higher variety and manufacturers have excess capacity, they tend to introduce new variants. By studying product proliferation in the context of the economic lot sizing problem, we show that the mindset of adding new products as long as the utilization is “low” can cause unbearable cash flow issues and profit losses. Instead of capacity utilization, we propose manufacturers to pay attention to the idle fraction of non-productive time (IFNPT); when IFNPT drops to zero (i.e., absence of idleness), managers should first increase capacity and then consider introducing new products. Since managers cannot observe the net profit contribution of a product, IFNPT constitutes a pragmatic indicator for deciding when to stop product proliferation. We also show that firms can afford a larger product portfolio with lower setup times and higher sale heterogeneity across the products. We gain additional insights by proving useful properties of the profit function that allow the study of product portfolio growth through time. We provide analytical justifications to support our main insights.
... These results demonstrate that most of the drill-downs consisted of a single attribute and that only one of the 10 most common drill-downs used a combination of more than two attributes. This result might be explained by the well-established phenomenon called choice overload from choice theory (Gourville & Soman, 2005), which suggests that increasing the number of choices given to a user may increase their effort in decision making. As is evident, teaching staff have commonly used a small subset of the features and rarely drilled down more than one level into the features. ...
Article
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Learning analytics dashboards commonly visualize data about students with the aim of helping students and educators understand and make informed decisions about the learning process. To assist with making sense of complex and multidimensional data, many learning analytics systems and dashboards have relied strongly on AI algorithms based on predictive analytics. While predictive models have been successful in many domains, there is an increasing realization of the inadequacies of using predictive models in decision-making tasks that affect individuals without human oversight. In this paper, we employ a suite of state-of-the-art algorithms, from the online analytics processing, data mining, and process mining domains, to present an alternative human-in-the-loop AI method to enable educators to identify, explore, and use appropriate interventions for subpopulations of students with the highest deviation in performance or learning process compared to the rest of the class. We demonstrate an application of our proposed approach in an existing learning analytics dashboard (LAD) and explore the recommended drill-downs in a course with 875 students. The demonstration provides an example of the recommendations from real course data and shows how recommendations can lead the user to interesting insights. Furthermore, we demonstrate how our approach can be employed to develop intelligent LADs.
... Consumers are, however, often overwhelmed when shopping environments offer too much information (Hu & Krishen, 2019;Roetzel, 2019). In a similar vein, too much variety and choice at the point of sale can harm (Chernev, 2003;Gourville & Soman, 2005). ...
Article
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Augmented reality-delivered product information (ARPI) can overcome the limited space at the point of sale to inform shoppers on demand and will therefore become more widespread in brick-and-mortar stores. To fill the void of academic research, this paper develops a model of how consumers process ARPI and how ARPI can shape brand image and purchase intentions. Making use of the cues-filtered-out theory, this paper suggests that the effect of ARPI controllability depends on information detailedness. An unintended backfire effect of controllability occurs when the accessible information is detailed, which is explained by the mediating process via perceived comprehensiveness. This backfire effect is a risk primarily in busy shopping times. The main experiment conducted in a hypermarket and four follow-up studies (using field, lab, and video settings) empirically confirm the proposed model on the basis of different data sources, including usage tracking, questionnaires, and scanner data. The paper derives managerial implications and outlines directions for future research. Supplementary information: The online version contains supplementary material available at 10.1007/s11747-022-00855-w.
... McShane and Böckenholt (2018) reexamined the same dataset as Chernev et al. (2015), to assess whether and how the effect of the four moderators differs depending on the outcome measure. Most research on choice overload has been focused on the effect of set size on choices between consumer goods, such as foods (Iyengar and Lepper, 2000;Chernev, 2003a,b;Sela et al., 2009;Townsend and Kahn, 2014) or electric appliances (Gourville and Soman, 2005;Sela et al., 2009;Diehl and Poynor, 2010;Greifeneder et al., 2010;Inbar et al., 2011). However, the effect has also been tested in the prosocial context of choosing between different charity organizations (non-governmental organizations, NGOs). ...
Article
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Choice overload is the phenomenon that increasing the number of options in an assortment makes choosing between options more difficult, sometimes leading to avoidance of making a choice. In this pre-registered online experiment (N = 501), choice overload was tested in a charitable behavior context, where participants faced a monetary donation choice. Charity organization assortment size was varied between groups, ranging between 2 and 80 options. The results indicate that there were no meaningful differences in donation likelihood between the 16 organization assortment sizes, neither for individuals with high preference certainty nor for individuals with uncertain preferences among charitable causes. Having more charitable organizations to choose from did not affect donation behavior.
... As such, package tours often fail to provide good services to Chinese tourists. They might dent the demand as it would be hard for consumers to evaluate the exact value of every single component in those products (Gourville & Soman, 2005;Soman & Gourville, 2001). When the package tour cannot meet Chinese GPTs expectation, Chinese tourists can feel frustrated and cheated. ...
Book
Assuming an international perspective, Chinese Tourist Outbound Behaviour presents an insightful exploration of the evolution of China’s tourism market, explores Chinese tourists’ behaviour, and considers how the country’s tourism landscape will expand in the future. Featuring 17 chapters compiled and written by industry experts representing 11 countries, this collection offers a vivid profile of Chinese tourists and the characteristics distinguishing them from other market segments. This book coincides with the growing interest in Chinese tourism and tourist behaviour as the top market in the world in terms of tourism spending and arrival numbers, presenting an overview of Chinese tourist segments and travel-related concerns to paint a clear picture of the market’s status. Chapters address the future of Chinese tourism, providing industry stakeholders an up-to-date view on this valuable market along with suggestions to best harness the market’s power. Providing an up-to-date exploration of numerous contemporary issues, this book will be valuable to a wide audience, including advanced students in tourism, hospitality and leisure and recreation studies and stakeholders, authorities, establishments and employees within the tourism industry. This book offers readers greater knowledge about the past, present and future of the Chinese outbound tourism market.
... However, in the individualization of a product, the user should also be given the feeling of having a wide range of choices. The number of available options per component should not be too low, but also not too high, as the user could quickly feel overwhelmed [30], whereas a low number may be insufficient for experts. When presented with many configuration options, the user should be supported in the decision-making process by a filter function or automatic preselection. ...
Chapter
Digital public participation formats are an emerging and accessible way to involve diverse groups of citizens in construction projects in their local area. Particularly, mixed reality can help project initiators to visualize the planned changes to the city landscape in an easy and understandable way, enabling people to participate in a creative manner. However, this technology is challenging for most project initiators, as it requires an extensive technical and/or domain experience. Besides that, specialized hardware and experienced staff is required. An easy on-boarding process, which introduces mixed reality step-by-step and offers assistance by external service providers could promote both adoption and usage. In this paper, we present the design process and resulting concept of a configurator for a public participation platform, that aims to guide initiators with different levels of technical knowledge. Besides detailing the design and development process of the prototype, we will present the preliminary results of our evaluation. The interview partners provided positive feedback on the usage of our configurator. Moreover, different approaches are necessary for the public and private sector when configuring and purchasing their participation solution. Finally, we highlight areas that are still in need of further work, such as the compliance with the regulations for public institutions and address further promising areas of research.
... Variety plays a critical role in consumer choice, and companies often stimulate purchase by constructing an assortment. Previous research examines factors influencing consumers' variety-seeking tendency from multiple perspectives, such as personality traits (Ariely and Levav 2000;Berlyne 1970), product characteristics (Gourville and Soman, 2005), and environmental factors (Levav and Zhu, 2009). However, how consumers' internal psychological factors affect variety-seeking remains an open question worthy of further exploration. ...
Article
With two extensive eye-tracking studies, we reveal that the introduction of a new attribute in a product assortment can increase the attention given to competing products. Moreover, we demonstrate that this increased attention, reflecting a verification search, negatively affects consumers´ attitudes and choices for competing products.
... Despite evidence indicating that having choices is better than having no choice, in some situations, too many options leads to suboptimal outcomes, a phenomenon known as choice overload. For instance, when faced with large arrays of alternatives, people are more likely to switch their initial choice (Chernev, 2003), to defer making a choice (Dhar, 1997;Chernev, 2006;Iyengar and Lepper, 2000), to demonstrate poorer performance (e.g., Iyengar and Lepper, 2000;Jacoby et al., 1974;Payne et al., 1993), or to report less satisfaction (e.g., Diehl and Poynor, 2010;Haynes, 2009;Iyengar and Lepper, 2000) and increased regret (Gourville and Soman, 2005;Inbar et al., 2011;Sagi and Friedland, 2007) over their decision compared to people who choose from smaller arrays (see Chernev et al., 2015, for a review). ...
Article
Given the choice, people are often drawn toward more options over fewer options in decision-making scenarios. However, mounting evidence indicates that sometimes, choosing from large arrays can result in suboptimal outcomes. The tendency to be overwhelmed, regretful, or less satisfied with a choice when there are many options to choose from is called choice overload. This effect has been well-studied in adult humans, but comparative research, such as with nonhuman primates, is lacking, despite the fact that such choice behavior may be related to general aspects of cognition that underlie behaviors such as foraging in the wild. In addition, research with monkeys can shed light on whether choice overload is a human-unique phenomenon that may be driven by sociocultural factors, or whether this effect may be shared more broadly among mammals. This experiment tested whether monkeys were susceptible to choice overload effects by using a computerized paradigm in which monkey subjects could choose from three, six, or nine task options. No evidence of choice overload was found for monkeys, although this may have been due to methodological limitations that are described.
... Distribution D cjt Weighted average of indicators of availability for brand j in category c on occasion t across retailers, weighted by the retailers' market shares in the preceding week. (Sotgiu & Gielens, 2015) Advertising A cjt Share of Voice, calculated as Adstock of brand j in category c on occasion t, relative to Adstock of the category at that time, where Adstock at time t = (1-k)*Advertising at time t + k*Adstock in the preceding week (Gijsenberg et al., 2011). Cfr. ...
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New product activity is critical for sustained success of consumer packaged goods (CPG) brands. However, the impact of new SKUs on the perceived quality, quality uncertainty and subsequent choice of the brand as a whole is, as of yet, not well understood. The authors study how new additions to the brand line shape consumers’ quality perceptions, and how this – next to the mere line length effect – influences their choice of brands over time. They do so in the setting of an emerging market (China), where new product activity is particularly pervasive. Using a unique scanner panel dataset of Chinese households over the period 2011-2014, they estimate a Bayesian learning model that accommodates varying quality, on two CPG categories, and for two types of new-product additions (new sensory SKUs vs. new non-sensory SKUs). They show that while adding new SKUs may lift the brand’s perceived quality level, it also makes consumers more uncertain about the quality of the brand – dampening their brand choice. This holds especially for light customers – an important part of the brand clientele. Managerial implications are discussed.
... Consumer psychology studies identified a wide range of moderating effects related to this ambiguity in customer characteristics (e.g. Chernev [2003]; Broniarczyk [2008]; Mogilner et al. [2008]; Briesch et al. [2009]) and item and category characteristics (e.g. de Clerck et al. [2001]; Gourville and Soman [2005]; Kalyanam et al. [2007]). ...
Article
Nowadays the majority of retail customers use multiple channels. We investigate the assortment, space and inventory problem for an omni-channel retailer operating with interconnected bricks-and-mortar stores and an online shop. For this problem it becomes essential to consider customers’ demand interactions across channels. Current literature mainly focuses on single-channel assortments and ignores cross-channel substitution. We contribute the first integrated omni-channel model that determines assortments for the online and bricks-and-mortar channel with stochastic, space-elastic and out-of-assortment and out-of-stock demand both for in-channel substitution and cross-channel substitution. A specialized heuristic is developed that is based on an iterative solution of a binary problem and demand updates. Our approach achieves near-optimal results for small instances and higher objective values as an alternative heuristic for larger instances. With the full integration of channels, omni-channel retailers can realize a profit increase that mainly depends on the magnitude of substitution rates. We further show numerically that in-channel substitution has a stronger impact on profits than cross-channel substitution when costs are equal across channels.
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Of the traditional marketing mixes that are used to influence consumer purchase decisions, the development of a pricing strategy that retains a loyal customer base without harming profitability remains the most elusive. Advancements in behavioural economics have demonstrated that the economic choices of human beings may not always be necessarily rational. In fact, previous studies have shown that the assumption of rationality is overstated in economic theories. Even under normal circumstances, the consumers tend to confuse price and value, often ending up purchasing high-priced products on the pretext that higher price is associated with a higher value. The inherent elements of irrationality that persist in consumer behaviour offer opportunities for the sellers to develop and apply new heuristics and priming techniques for setting prices that may coax the consumers to make a purchase. Everyone gets influenced by one or another cognitive distortion at some point. On this account, understanding the cognitive biases in consumer decision-making process is key to developing an effective pricing strategy. This chapter gives a detailed account of how well the consumers respond to subtle nuances in price offers and other price-related priming strategies through the lens of behavioural economics.
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The smartwatch, which is considered as the most complex gadget among the wearables, is becoming ubiquitous with increasing market penetration. High-tech smartwatches are revolutionising the health and fitness industry segment in a myriad ways ranging from meeting individual needs to supporting institutional imperatives. Despite their growing popularity, the diffusion of smartwatches is relatively slow, and little is known about the brand variants offered by the manufacturers. We examined the technical and functional attributes of smartwatch models using the Multiple Discriminant Analysis (MDA) to gain insights into the market positioning of the brand variants. Our results not only confirmed the presence of brand variants among the leading smartwatch manufacturers but also examined the unique positioning of the same. Our analysis identified and differentiated the branded variants using two dimensions: activity tracking and device morphology. The study findings are expected to augment product strategy exercise undertaken by smartwatch manufacturers who might be interested in exploring the right combination of the technical or functional features.
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The provision of choice within interventions has been associated with increased motivation, engagement and interest, as well as improved clinical outcomes. Existing reviews are limited by their wide inclusion criteria or by not assessing behaviour change and mood outcomes. This review examines whether participant-driven choice-based interventions specifically are more likely to be enjoyed and accepted by participants compared to no-choice interventions, and whether this impacts on intervention outcomes in terms of behaviour change or mood. Forty-four randomised controlled trials were identified for inclusion. Random effects meta-analyses were performed for retention-related outcomes (drop-out, adherence and satisfaction), and aggregate behaviour change and mood outcomes. Choice-based interventions resulted in significantly less participant drop-out and increased adherence compared to interventions not offering choice. Results for the behaviour change and mood analyses were mixed. This meta-analytic review demonstrates that choice-based interventions may enhance participant retention and adherence, thus researchers and clinicians alike should consider the provision of choice when designing research and interventions. The evidence for the role of choice in behaviour change and mood is less convincing, and there is a need for more, higher quality research in this area.
Article
We consider an individual decision-making problem where the decision maker is subject to inattention. The source of this inattention is the frames with which the alternatives appear; leading to randomness in choice. We characterize a rule called frame-based stochastic choice rule, according to which the choice probability of an alternative (say, x) is the probability with which attention is drawn by its frame and not by the frames which are associated with the alternatives that beat x according to a complete and antisymmetric binary relation. The choice probability is zero if a better alternative appears with the same frame. The rule and the treatment are largely influenced by Manzini and Mariotti (2014). Our framework is applicable to settings where frames are advertisements or types of packaging.
Article
Offering the ideal product that individuals will systematically repurchase (intensification) and satisfying their need for variety in order to make them cross-purchase within a brand-line’s products (diversification) instead of switching toward competitors are two fundamental functions of brand-lines. Both rely on product variety, organized along breadth (complementary products) and depth (substitutes). We analyze the differing impacts that breadth and depth have on brand-line repurchasing behavior. Repurchasing is broken down into four components based on its motivation, intensification (repurchasing the same product) vs. diversification (cross-purchasing), and its temporal perspective, inter-trip (over shopping trips) vs. intra-trip (during purchasing trips). Whereas breadth demonstrates only positive effects on the repurchasing components, it has no protective effect against brand-switching. Conversely, depth has a negative impact on inter-trip product repurchasing, the most frequent repurchasing component, but offers a protective negative impact against brand-switching. We examine the moderating impacts of brand-line quality, brand-line alignability, and household size.
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Mitigating perceived uncertainty and risk is critical for successful exchanges in an online B2B marketplace. However, scant empirical research has been devoted to the topic, and even less to small- and medium-sized enterprises (SMEs). We investigate the use of quality signals and recommendations to foster buyer-supplier matching in an online B2B marketplace of SMEs. Unique proprietary data from a leading B2B e-commerce platform suggest that such a matching is significantly related to signals of SME buyers' quality and credibility embedded in how projects are described. Moreover, appropriately designed recommendation system can increase the matching rate because it helps reduce buyers' information overload. This research highlights the importance of integrating online channel data with traditional offline channel data to accurately assess the drivers of buyer-supplier matching. Our findings provide valuable insights into how to design and manage an online B2B marketplace for SMEs to yield more successful matches.
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We perform a meta-analytic review of the effect of retail assortment size on consumer perceptions, choice, and retail sales/share using a database comprising of 177 studies obtained from 95 academic papers published during 1970–2021. We define assortment size broadly as the total number of distinct alternatives (options) available to the consumer when he/she makes a choice in a product category. This number of alternatives manifest in the form of a number of brands, number of stock-keeping-units (SKUs), or simply number of items such as different colors or packaging. An increase in assortment size can lead to beneficial effects such as assortment preference, perceived choice satisfaction, confidence, freedom, purchase incidence, sales, and profits, as well as negative consequences such as information overload, increased cognitive effort, choice uncertainty, choice difficulty, and hence choice avoidance. Numerous researchers have reported the effect of assortment size on one or more of these factors. We summarize these effects using a metric called assortment size (net) benefit elasticity by positively valuing the beneficial effects and negatively valuing the harmful effects. Assortment size benefit elasticity is defined as the percent change in net benefit for a 1% change in assortment size. Our meta-analysis reveals that the mean assortment size benefit elasticity across 1936 valid elasticity observations is .082, and this effect is moderated by many study design and environmental factors. We also explore nonlinearity in assortment size effect and whether the effect is different for online vs. offline purchasing. Based on these findings, we list 30 characteristics conducive for assortment addition/deletion and specify several directions for future research.
Article
While limited attention has been paid to personality traits that influence tourists’ variety-seeking behavior with respect to food, evidence shows that Chinese people choose less variety than their counterparts in Western countries. We propose that regulatory focus influences consumers’ food variety-seeking behavior. Building on the theoretical alignment between regulatory focus, food neophobia, and food variety-seeking tendency, this research examines the effect of regulatory focus on Chinese consumers’ food variety-seeking behavior through three studies. Study 1 indicates that prevention-focused consumers have lower food variety-seeking intention than promotion-focused consumers. Study 2 shows that the former have higher food neophobia, leading to lower intention to seek food variety. Food neophobia plays the mediating role. Study 3 examines the moderating role of psychological safety, which can decrease food neophobia’s negative influence on seeking food variety. The results and implications of our findings are presented in the discussion section.
Article
We empirically examine the effect of product variety on sales at the stock‐keeping unit (SKU) level. Prior empirical operations management studies generally treat product variety as a single‐dimensional measure (e.g., the number of SKUs carried by the store, distribution center, or firm) and study its impact on aggregate sales (e.g., sales at the store, distribution center, or firm). As such, SKUs from different brands are assumed to contribute equally to total sales, which is not always the case. To address this, we need to conceptualize product variety within brands and investigate its impact on sales at a more granular level. In this study, we propose and theoretically articulate two product variety dimensions (within‐brand variety [WV] and average WV of other brands [AWVO]) to investigate the mechanisms that connect product variety to SKU‐level sales. Using a detailed transaction dataset from a local grocery retailer, we first show that product variety conceptualized within brands (i.e., the mean of WVs [MWV]) does have an impact on aggregate subcategory sales, as the literature suggests. At the SKU level, we find WV increases same‐brand SKU sales, while AWVO reduces it. Our work provides an alternative explanation to the inverted U‐shaped relationship between product variety and aggregate sales observed in the literature: Increasing variety only increases sales of SKUs belonging to the brand whose variety has increased, while it decreases sales of the other SKUs. We also find that variety effects vary significantly across different profitability levels and product categories. Product variety appears to have the strongest positive effect on high‐margin products. The impact of product variety on specific product category sales varies from as high as 11% to negligible. We further discuss the practical value of our findings and show the robustness of our results through multiple tests while addressing endogeneity using the control function approach.
Article
We present a theory of multi-attribute choice founded in the neuroscience of perception. According to our theory, valuation is formed through a series of pairwise, attribute-level comparisons implemented by (divisive) normalization — a form of relative value coding observed across sensory modalities and in species ranging from honeybees to humans. Such “pairwise normalization” captures a broad range of behavioral regularities in multi-attribute choice, including the compromise and asymmetric dominance effects, the diversification bias in allocation decisions, and majority-rule preference cycles.
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The paradox of choice leads one to desire more options over fewer options even when there are negative consequences when choosing from larger arrays (choice overload). The paradox of choice may be shared among mammals or it could result from cultural influences relevant to humans. Research with monkeys and young children sheds light on the developmental precursors of the paradox and may highlight the human-uniqueness of this effect. I tested young children (41.5–66.0 months) and monkeys (tufted capuchins, rhesus macaques) to examine choice overload effects. Limited evidence was found that children exhibited choice overload when choosing among six and twelve toys but not when choosing among three toys. No evidence of choice overload was found for monkeys, although this may be due to methodological limitations. Consistent with previous literature on choice and control, monkeys also demonstrated a preference for more options over fewer.
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Information overload syndrome has been recognized as a widespread problem in enterprises. Despite the profound research on information overload syndrome, there has rarely been research that empirically and separately identifies two important attributes of information overload syndrome, information overload and interaction overload. In this paper, the empirical research with survey data identifies information overload and interaction overload separately and measures some other factors that may correlate to them differently. The research results indicate that information overload and interaction overload may be identified separately, and there are factors that may correlate to them differently. Such results will help the entrepreneurs for better management practice, especially to alleviate information overload syndrome in an enterprise in different ways corresponding to whether the syndrome is from information overload or interaction overload.
Article
Are there too many options in online shopping? Although extant studies have largely focused on the effects of choice overload, few shed light on choice overload in online shopping situations. In light of online shopping’s untouchable nature and sorting mechanisms, we argue that choice overload in online shopping is associated with consumer vigilance and assortment desirability. Across four experiments, we found that the size of the online choice set significantly influences consumers’ choice difficulty and choice deferral. We also discovered that consumer vigilance and assortment desirability moderate these relationships. Specifically, high vigilance increases the negative impact of assortment size on consumer decision, whereas assortment product desirability alleviates this consequence. We contribute to the literature by extending prior predictions of choice overload and proposing a framework involving choice overload, vigilance, and desirability for future research.
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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.
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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.
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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...
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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 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.
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Previous theoretical research has identified three primary effects of a product proliferation strategy: (1) a broad product line can increase overall demand, (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). 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. Our empirical results for the personal computer industry over the period 1981-1992 demonstrate 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.