Determining where to shop: Fixed and variable costs of shopping

doi:10.1177/002224379803500306

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Determining where to shop: Fixed and variable costs of shopping

Journal Article•DOI•

Determining where to shop: Fixed and variable costs of shopping

David Bell¹, Teck-Hua Ho², Christopher S. Tang¹•Institutions (2)

University of California, Los Angeles¹, University of Pennsylvania²

01 Aug 1998-Journal of Marketing Research (American Marketing Association)-Vol. 35, Iss: 3, pp 352-369

TL;DR: In this paper, the authors developed and tested a new model of store choice behavior whose basic premise is that each shopper is more likely to visit the store with the lowest total shopping cost The total shopping

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Abstract: The authors develop and test a new model of store choice behavior whose basic premise is that each shopper is more likely to visit the store with the lowest total shopping cost The total shopping

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Journal Article•DOI•

Understanding retail branding: conceptual insights and research priorities

[...]

Kusum L. Ailawadi¹, Kevin Lane Keller¹•Institutions (1)

Dartmouth College¹

01 Jan 2004-Journal of Retailing

TL;DR: In this article, the authors integrate lessons from branding and retail image research to provide a better understanding of how retailers create their brand images, paying special attention to the role of the manufacturer and private label brand assortment.

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1,045 citations

Journal Article•DOI•

Multichannel customer management: Understanding the research-shopper phenomenon

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Peter C. Verhoef¹, Scott A. Neslin², Björn Vroomen³•Institutions (3)

University of Groningen¹, Dartmouth College², Economic Policy Institute³

01 Jun 2007-International Journal of Research in Marketing

TL;DR: In this paper, a model for understanding the causes of research shopping is proposed, and potential strategies for managing it are investigated, including attribute-based decision-making, lack of channel lock-in and crosschannel synergy.

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878 citations

Journal Article•DOI•

On the Relationship Between Inventory Costs and Variety Benefits in Retailassortments

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Garrett van Ryzin¹, Siddharth Mahajan²•Institutions (2)

Columbia University¹, Duke University²

01 Nov 1999-Management Science

TL;DR: In this paper, a retailer must construct an assortment for a category of product variants distinguished by some attribute such as color or flavor, i.e., select a subset variants to stock and determine purchase quantities for each offered variant.

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Abstract: Consider a category of product variants distinguished by some attribute such as color or flavor. A retailer must construct an assortment for the category, i.e., select a subset variants to stock and determine purchase quantities for each offered variant. We analyze this problem using a multinomial logit model to describe the consumer choice process and a newsboy model to represent the retailer's inventory cost. We show that the optimal assortment has a simple structure and provide insights on how various factors affect the optimal level of assortment variety. We also develop a formal definition of the level of fashion in a category using the theory of majorization and examine its implications for category profits.

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499 citations

Cites background from "Determining where to shop: Fixed an..."

...Also, customers may shop stores to purchase a “basket” of products from different categories based on a “shopping list” (see, for example, Bell et al. (1997)), and stores may differentiate themselves based on the total basket they offer. Despite these myriad limitations, Corollary 1 does provide a simple and intuitively appealing explanation of the fact (see Pashigian (1988) for empirical evidence) that fashion goods tend to have higher margins than basic goods....
[...]
...Also, customers may shop stores to purchase a “basket” of products from different categories based on a “shopping list” (see, for example, Bell et al. (1997)), and stores may differentiate themselves based on the total basket they offer. Despite these myriad limitations, Corollary 1 does provide a simple and intuitively appealing explanation of the fact (see Pashigian (1988) for empirical evidence) that fashion goods tend to have higher margins than basic goods. In short, Corollary 1 simply suggests that higher gross margins may serve to compensate retailers for the increased inventory risks induced by the highly fragmented purchase choices of the fashion category. (Lazear (1986) proposes an alternative theory for this effect based on differences in the variability of reservation prices for each category....
[...]
...Also, customers may shop stores to purchase a “basket” of products from different categories based on a “shopping list” (see, for example, Bell et al. (1997)), and stores may differentiate themselves based on the total basket they offer....
[...]

Book Chapter•DOI•

Assortment Planning: Review of Literature and Industry Practice

[...]

A. Gürhan Kök¹, Marshall L. Fisher², Ramnath Vaidyanathan²•Institutions (2)

Duke University¹, University of Pennsylvania²

01 Jan 2008

TL;DR: In this article, the goal of assortment planning is to specify an assortment that maximizes sales or gross margin subject to various constraints, such as a limited budget for purchase of products, limited shelf space for displaying products, and a variety of miscellaneous constraints such as desire to have at least two vendors for each type of product.

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Abstract: A retailer’s assortment is defined by the set of products carried in each store at each point in time. The goal of assortment planning is to specify an assortment that maximizes sales or gross margin subject to various constraints, such as a limited budget for purchase of products, limited shelf space for displaying products, and a variety of miscellaneous constraints such as a desire to have at least two vendors for each type of product.

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476 citations

Journal Article•DOI•

The habitual consumer.

[...]

Wendy Wood¹, David T. Neal¹•Institutions (1)

University of Southern California¹

01 Oct 2009-Journal of Consumer Psychology

TL;DR: The authors show that habits are a specific form of automaticity in which responses are directly cued by the contexts (e.g., locations, preceding actions) that consistently covaried with past performance.

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475 citations

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References

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Open Access

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Book•

Discrete Choice Analysis: Theory and Application to Travel Demand

[...]

Moshe Ben-Akiva, Steven R. Lerman

18 Dec 1985

TL;DR: In this article, the authors present the methods of discrete choice analysis and their applications in the modeling of transportation systems and present a complete travel demand model system presented in chapter 11, which is intended as a graduate level text and a general professional reference.

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Abstract: This book, which is intended as a graduate level text and a general professional reference, presents the methods of discrete choice analysis and their applications in the modeling of transportation systems. The first seven chapters provide a basic introduction to discrete choice analysis that covers the material needed to apply basic binary and multiple choice models. The chapters are as follows: introduction; review of the statistics of model estimation; theories of individual choice behavior; binary choice models; multinomial choice; aggregate forecasting techniques; and tests and practical issues in developing discrete choice models. The rest of the chapters cover more advanced material and culminate in the development of a complete travel demand model system presented in chapter 11. The advanced chapters are as follows: theory of sampling; aggregation and sampling of alternatives; models of multidimensional choice and the nested logit model; and systems of models. The last chapter (12) presents an overview of current research frontiers.

...read moreread less

6,327 citations

Journal Article•DOI•

An information processing theory of consumer choice

[...]

James R. Bettman

22 Jan 1979-Journal of Marketing

2,228 citations

Posted Content•

A Probabilistic Choice Model for Market Segmentation and Elasticity Structure

[...]

Wagner A. Kamakura¹, Gary J. Russell²•Institutions (2)

Rice University¹, University of Iowa²

01 Jan 1989-Social Science Research Network

TL;DR: This paper proposed a flexible choice model that partitions the market into consumer segments differing in both brand preference and price sensitivity, and applied it in a study of competition between national brands and private labels in one product category.

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Abstract: Marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching. Though the approach is useful, it typically ignores the destabilizing role of marketing variables (e.g., price) in switching behavior. The authors propose a flexible choice model that partitions the market into consumer segments differing in both brand preference and price sensitivity. The result is a unified description of market structure that links the pattern of brand switching to the magnitudes of own- and cross-price elasticities. The approach is applied in a study of competition between national brands and private labels in one product category.

...read moreread less

1,251 citations

Journal Article•DOI•

The Role of the Scale Parameter in the Estimation and Comparison of Multinomial Logit Models

[...]

Joffre Swait¹, Jordan J. Louviere²•Institutions (2)

Mercer University¹, University of Utah²

01 Aug 1993-Journal of Marketing Research

TL;DR: This paper showed that the unit of the utility scale in a multinomial logit (MNL) model is inversely related to the utility of choice data, but it is not generally recognized that the utility in a MNL model is positively related to choice data.

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Abstract: Multinomial logit (MNL) models are widely used in marketing research to analyze choice data, but it is not generally recognized that the unit of the utility scale in a MNL model is inversely relate...

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1,195 citations

Journal Article•DOI•

A Probabilistic Choice Model for Market Segmentation and Elasticity Structure

[...]

Wagner A. Kamakura¹, Gary J. Russell¹•Institutions (1)

Vanderbilt University¹

01 Nov 1989-Journal of Marketing Research

TL;DR: In this paper, the authors characterize market structure by studying the patterns of substitution implied by brand switching, but this approach typically ignores the destabilizing effect of brand switching on the market.

...read moreread less

1,136 citations