Essays in Consumer Choice Driven Assortment Planning PDF Download
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Author: Denis R. Saure
Publisher:
ISBN:
Category :
Languages : en
Pages :
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In particular, we study competition among retailers when they have access to common products, i.e., products that are available to the competition, and where consumers have full information about the retailers' offerings. Our results shed light on equilibrium properties in such settings and the effect common products have on this behavior.
Author: Denis R. Saure
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In particular, we study competition among retailers when they have access to common products, i.e., products that are available to the competition, and where consumers have full information about the retailers' offerings. Our results shed light on equilibrium properties in such settings and the effect common products have on this behavior.
Author: Dorothée Honhon
Publisher:
ISBN:
Category :
Languages : en
Pages : 330
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Author: Gómez-Suárez, Mónica
Publisher: IGI Global
ISBN: 1522502211
Category : Business & Economics
Languages : en
Pages : 656
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Book Description
As the global market continues to recuperate from economic downfall, it is essential for private label products to find ways to compete with alternatives offered by wholesale and national retailers. In many cases, it becomes difficult for off-brand products to generate market appeal when consumers have preconceived notions about the quality of generic products and loyalty to branded products. The Handbook of Research on Strategic Retailing of Private Label Products in a Recovering Economy emphasizes advertising and promotional approaches being utilized, as well as consumer behavior and satisfaction in response to marketing strategies and the sensitive pricing techniques being implemented to endorse generic and store-brand products available on the market. Highlighting brand competition between wholesalers, retailers, and private brand names following a global economic crisis, this publication is an extensive resource for researchers, graduate-students, economists, and business professionals.
Author: Ameera Ibrahim
Publisher:
ISBN:
Category :
Languages : en
Pages : 75
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Central to modern-time, consumer-focused retailing is the ability to provide attractive and reasonably-priced product assortments for different customer profiles. To this end, retailers can benefit from the use of data analytics in order to identify distinct customer segments, each characterized by their buying power, shopping behavior, and preferences. Further, retailers can also benefit from a careful examination of alternative procurement options and cost levers associated with products that are considered for inclusion in the assortment. Issues of assortment planning lie at the interface of operations and marketing. Profitable planning trade-os can be identified using an optimization methodology and are simultaneously driven by consumer preferences and supply cost considerations. This dissertation proposes and investigates novel, integrated optimization models for assortment planning with the following overarching objectives: (i) To reveal insights into assortment decisions under product substitutability or complementarity and multiple customer segments; (ii) to improve the computational tractability of (nonlinear discrete) optimization models that arise in such contexts and to demonstrate their efficacy for large-scale data instances. In the first essay, we investigate the joint optimization of assortment and pricing decisions for complementary retail categories with relatively popular products having high and stable sales volumes, such as fast-moving consumer goods. Each category comprises substitutable items (e.g., different coffee brands) and the categories are related by cross-selling considerations that are empirically observed in marketing studies to be asymmetric in nature. That is, a subset of customers who purchase a product from a primary category (e.g., coffee) can typically opt to also buy from one or several complementary categories (e.g., sugar and/or coffee creamer). We propose a mixed-integer nonlinear program that maximizes the retailer's profit by jointly optimizing assortment and pricing decisions for multiple categories using a deterministic maximum-surplus consumer choice model. A linear mixed-integer reformulation is developed, which effectively enables an exact solution to large, industry-sized problem instances using commercial optimization solvers. Our computational study indicates that overlooking cross-selling between retail categories can result in substantial profit losses, suboptimal (narrower) assortments, and inadequate prices. The demonstrated tractability of the proposed model paves the way for "store-wide" optimization of categories that exhibit significant complementarity, which retailers can infer from market basket analysis. The second essay addresses an assortment packing problem where a decision maker optimizes the assortment and release times of products that belong to different categories over a multi-period planning horizon. Products in a same category are substitutable, whereas products across categories may exhibit complementarity relationships. All products have a longevity over which their attractiveness gradually decays (e.g., electronics or fashion products), while being positively or negatively impacted by the specific mix of substitutable or complementary products that the retailer has introduced. Our proposed 0-1 fractional program employs an attraction demand model and subsumes recent assortment packing models in the literature. We highlight the effect of overlooking cross-selling and cannibalization on the profit using an illustrative example. We develop linearized reformulation that afford exact solutions to small-sized problem instances. Furthermore, a linear programming-based heuristic approach is devised and is demonstrated to yield near-optimal solutions for large-scale computationally challenging problem instances in manageable times. Model extensions are discussed, especially in the context of the movie industry where exhibitors have to decide on the assortment of movies to display and their optimal display times.
Author: Dorothée Honhon
Publisher:
ISBN: 9781109872033
Category :
Languages : en
Pages : 164
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Book Description
In Chapter 1, we consider a single-period assortment planning and inventory management problem for a retailer, using a locational choice model to represent consumer demand. We first determine the optimal variety, product location, and inventory decisions under static substitution. We show that the optimal solution can be such that the most popular product is not offered. We then obtain bounds on profit when customers dynamically substitute, using static substitution for the lower bound, and retailer-controlled substitution for the upper bound. We thus define two heuristics to solve the problem under dynamic substitution, and numerically evaluate their performance.
Author: R. Shanthi, M. Rafeeque Ahmed, S. Gurusamy, P. Murari
Publisher: MJP Publisher
ISBN:
Category : Business & Economics
Languages : en
Pages : 686
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Book Description
The origins of retail are old as trade itself. Barter was the oldest form of trade. For centuries, most merchandise was sold in market place or by peddlers. Medieval markets were dependent on local sources for supplies of perishable food because Journey was far too slow to allow for long distance transportation. However, customer did travel considerable distance for specialty items. The peddler, who provided people with the basic goods and necessities that they could not be self sufficient in, followed one of the earliest forms of retail trade. Even in prehistoric time, the peddler traveled long distances to bring products to locations which were in short supply. “They could be termed as early entrepreneurs who saw the opportunity in serving the needs of the consumers at a profit” Later retailers opened small shops, stocking them with such produce. As towns and cities grew, these retail stores began stocking a mix of convenience merchandise, enabling the formation of high-street bazaars that become the hub retail activity in every city. In the great sweep of social and retail history, the ‘modern’ shopping experience can be said to have commenced with the appearance of the department store in the middle of the 19th century.
Author: Ying Cao (Ph. D.)
Publisher:
ISBN:
Category : Advertising
Languages : en
Pages :
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Book Description
This dissertation consists of three essays which study assortment planning and inventory management of substitutable products motivated by different practical problems. Chapter 2 considers the assortment planning problem for a retailer who faces customers that buy multiple differentiated products (n-pack) on a store visit. We develop two choice models: the probabilistic choice rule which captures the heterogeneous consumer population choice pattern and maximum choice rule which captures the homogeneous consumer population choice pattern. We find that, under probabilistic choice rule, the optimal assortment is such that it includes a certain number of the most and least popular products. In contrast, under maximum choice rule, the optimal assortment does not have a fixed structure except that it is guaranteed to include the most popular product. We develop an algorithm under maximum choice rule which is shown to have good performance. In addition, we derive the structure of optimal assortment under both choice rules when a retailer ignores key features of n-pack choice model including choice premium and basket shopping behavior. We also conduct a numerical study where we show that ignoring these key features can lead to significant profit loss for a retailer. Chapter 3 explores the assortment planning for a firm who faces a two-sided market. That is, the firm receives revenues from two distinct user groups: the customers, who pay for the products it sells and the advertisers who pay to advertise their brand to the customers. We obtain structural properties of the optimal assortment. We also consider the case where the firm is allowed to offer multiple products with the same attractiveness profile and price. In this case, we obtain conditions under which the optimal assortment is made out of distinct products. In addition, we show that ignoring the revenue from the customers or the advertisers, or focusing only on one segment when making product assortment decisions can lead to a significant revenue loss; specifically, we derive the theoretical bound on revenue loss in these situations. Chapter 4 studies the decision making of an inventory manager who needs to decide order quantities of multiple substitutable products in his store. As such, the decision maker typically checks the sales history of the products. When there is stock-out, the sales history provides inaccurate information because the lost sales are unobservable and the sales from substitution are indistinguishable from first-choice sales, which we refer to as the "doublecensoring effect". To study the impact of substitution rate and information amount on decision maker's performance, we design an experiment where subjects need to decide inventory levels for 2 substitutable products in consecutive 30 periods. The experimental data shows that subjects underestimate the demand for high demand product and overestimate the demand for low demand product. Moreover, the bias is worse when there is substitution in fully censored information treatment. Also, when subjects are provided with less information, they tend to order larger quantity in early periods in order to learn demand.
Author: Yulia Vorotyntseva
Publisher:
ISBN:
Category : Management science
Languages : en
Pages :
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Book Description
This dissertation includes three essays. The first two essays are concerned with empirical investigation of individual choice by means of laboratory experiment, and the third one is concerned with integrating one particular behavior pattern – consumer learning – into assortment decisions. The summaries of these essays are provided below. In the first essay, we study how customers are choosing prices in a Pay-What-You-Want (PWYW) business model. Under PWYW the price for a product is fully determined by a buyer: the seller cannot reject any offer. We study two factors that can potentially affect PWYW prices: the seller’s production costs and the buyer’s private valuation of the product. We hypothesize that buyers may anticipate the seller’s loss-aversion, so they will be reluctant to choose prices below the costs, and that the prices increase as the buyer’s valuation increases. We suggest a model that incorporates this hypothetical behavior and estimate it using the dataset from a previously published experimental study. Based on the preliminary insights we obtain, we design and conduct our own controlled laboratory experiment. Our findings suggest that PWYW prices are indeed increasing on average in the buyer’s valuation and seller’s costs. In the second essay we provide the results of empirical investigation of the behavior of human assortment planners. Assortment planning, that is, the selection of products to offer in a store or the design of a product line for a manufacturer, is often performed by managers without any support from computerized optimization algorithms. The goals of our study are (1) to find if human decision makers deviate from the expected profit-maximizing solution in some systematic way and (2) to investigate the effect of decision support tools on the efficacy of assortment planners. To do this, we develop and conduct a behavioral experiment, where the subjects are repeatedly picking assortments in a simplified computerized market environment. We find that the subjects perform better when the profit maximizing assortment consists of fewer products and that subjects improve their decisions over time. The effect of decision support is somewhat surprising: under certain conditions providing subjects with more information resulted in worse performance. In the third essay, we develop a model that explicitly incorporates consumer learning into a firm’s assortment problem. Consumer’s choice of a product from a particular category is influenced by her beliefs about how well the product fits her needs. When a consumer purchases a product repeatedly, her experience with it affects her beliefs and, consequently, her future choices. By providing the consumer with an assortment to choose from, the firm increases the chances that the consumer will find a product that is suitable for her and keep purchasing from the firm in the long term. However, by doing so the firm faces a risk that a less profitable product gets substituted for a more profitable one. The model we develop allows to investigate this tradeoff analytically.
Author: Alexander Chernev
Publisher: Now Pub
ISBN: 9781601985347
Category : Business & Economics
Languages : en
Pages : 74
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Book Description
Product Assortment and Consumer Choice: An Interdisciplinary Review examines existing literature and builds on the current theoretical developments across different research domains to develop a set of research propositions delineating the impact of product assortment on consumer choice. Taking a consumer's perspective to examine how product assortment influences decision making and choice, this monograph defines the consumer aspect of assortment research to answer three key questions. First, how do consumers perceive the variety of items in an assortment? The first part of this review examines factors that influence consumer perceptions of the variety of an assortment. In particular, it investigates how factors such as assortment size, the degree of distinctiveness of assortment options, the dispersion of option frequencies, and the organization of the assortment influence consumer perceptions of assortment variety. Second, how do consumers choose an item from a given assortment? The second part discusses factors that influence consumer choice of an item from a given assortment. It examines the impact of assortment size on the purchase likelihood from a given assortment, the number of options purchased, and the particular options chosen from the assortment. Third, how do consumers choose among assortments? The third part examines factors that influence consumer choice among assortments. In particular, it investigates how assortment size, assortment structure, and purchase quantity influence consumers' choice of an assortment. Conceptual analysis of the existing research in each of these three areas is summarized in a series of research propositions that integrate current findings and offer directions for future research. Product Assortment and Consumer Choice: An Interdisciplinary Review concludes with a discussion of the theoretical contributions and managerial implications of existing product assortment research and identify venues for further investigation.
Author: Maria Esther Mayorga
Publisher:
ISBN:
Category :
Languages : en
Pages : 228
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