HowDoesAssortmentAffectGroceryStoreChoice

HowDoesAssortmentAffectGroceryStoreChoice - How Does...

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How Does Assortment Affect Grocery Store Choice? Richard A. Briesch (Southern Methodist University)* Pradeep K. Chintagunta (University of Chicago)** Edward J. Fox (Southern Methodist University)*** September 2004 Revised July 2005 Revised July 2006 Revised September 2007 Revised January 2008 * Assistant Professor of Marketing, Edwin L. Cox School of Business, Southern Methodist University, Dallas, TX; phone: 214-768 3180; rbriesch@mail.cox.smu.edu ** Robert Law Professor of Marketing, Graduate School of Business, University of Chicago, Chicago, IL; phone 773 702-8015; pradeep.chintagunta@gsb.uchicago.edu *** Associate Professor of Marketing, Edwin L. Cox School of Business, Southern Methodist University, Dallas, TX; phone: 214-768 3943; efox@mail.cox.smu.edu The authors would like to thank David Bell and John Slocum for their comments and suggestions. The second author also thanks the Kilts Center for Marketing at the Chicago GSB for financial support. Any mistakes or omissions are the sole responsibility of the authors.
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2 How Does Assortment Affect Grocery Store Choice? We investigate the impact of product assortments, along with convenience, prices and feature advertising, on consumers’ grocery store choice decisions. Extending recent research on store choice, we add assortments as a predictor, specify a very general structure for heterogeneity, and estimate store choice and category needs models simultaneously. Using household-level market basket data, we find that assortments are generally more important than retail prices in store choice decisions. We find that the number of brands offered in retail assortments has a positive effect on store choice for most households, while the number of stock-keeping-units [SKUs] per brand, sizes per brand and proportion of SKUs sold at a store that are unique to that store (a proxy for presence of private labels) have a negative effect on store choice for most households. We also find more heterogeneity in response to assortment than to either convenience or price. Optimal assortments therefore depend on the particular preferences of a retailer’s shoppers. Finally, we find a correlation in household- level responses to assortment and travel distance ( r =0.43), suggesting that the less important assortment is to a consumer’s store choices, the more the consumer values convenience and vice versa. (keywords: assortment, store choice, shopping behavior, retail, random effects)
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Introduction “Why do consumers shop at the stores they do?” Marketing academics and practitioners have long recognized the importance of this question because it affects not only where consumers buy, but what and how much they buy. Shoppers consistently say that retail assortments affect their store choice decisions, ranking it third in importance behind convenient locations and low prices as a choice criterion (Arnold, Ma and Tigert 1978; Arnold and Tigert 1981; Arnold, Roth and Tigert 1981; Arnold, Oum and Tigert 1983).
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HowDoesAssortmentAffectGroceryStoreChoice - How Does...

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