Special Session Abstract - S Something For Everyone

[ to cite ]:
(1999) ,"Special Session Abstract - S Something For Everyone", in NA - Advances in Consumer Research Volume 26, eds. Eric J. Arnould and Linda M. Scott, Provo, UT : Association for Consumer Research, Pages: 419-420.

Advances in Consumer Research Volume 26, 1999      Pages 419-420

SPECIAL SESSION ABSTRACT - S

SOMETHING FOR EVERYONE

 

"THE VARIETY OF AN ASSORTMENT"

Stephen J. Hoch, University of Pennsylvania

Eric T. Bradlow, University of Pennsylvania

Brian Wansink, University of Illinois, Urbana-Champaign

How do people perceive the variety contained in an assortment? Specifically, we consider the variety question in the context of assortments of multi-attribute categorical objects of fixed size n. We develop a simple and flexible metric for characterizing the informational structure of any categorical assortment. The metric is calculated by considering the dissimilarity between all {n choose 2} pairs of objects in the assortment. Aggregating across all pairs in the set, the variety of each assortment can be represented as a function of the number of pairs that differ by zero attributes (duplicate objects), one attribute, ..., up to n attributes (completely distinct objects). The metric is comparable in spirit to a Hamming distance, a measure developed to study coding transmission errors in WWII. It also is related to work in the psychology of similarity and classification and concept learning, the big difference being that we focus on the overall psychological distance contained in an assortment of objects rather than the single object focus of previous work.

We then use the metric to develop assortments that vary widely in terms of their pattern of pairwise distinctions between objects in each set. In the empirical work, we consider the influence of three factors on variety perceptions: the informational structure of each assortment (i.e., the pattern of pairwise distinctions); the level of organization of the objects (organized vs. random two-dimensional displays); and the task orientation (analytic, intentional processing vs. holistic, incidental processing). First, we find that informational structure matters a lot. Distinctions of one have the biggest marginal influence (.11) on variety perceptions, followed by distinctions of two (.05), and distinctions of three (02); people easily pick up the presence of duplicate objects but there are diminishing returns to higher-order uniqueness. Organization of the display also influences variety perceptions; in general, organized displays are seen as offering less variety, probably because organization increases the proximity between similar objects. Finally, the task orientation interacts with both informational structure and level of organization. When subjects adopt an analytic as opposed to holistic mode of processing, variety perceptions are more closely tied to the underlying pattern of distinctions in the assortment. And organization reduces variety perceptions only when subjects engage in holistic processing, suggesting that analytic processing subjects are able to overcome lack of proximity of similar objects through a more thorough scanning of the entire display. In order to better understand why organization influences variety perceptions, we modify our variety metric to distinguish between local (adjacent pairs) and non-local information structure. In a second study we show that people place greater emphasis on local than non-local information. With this greater focus on local information, organized displays are seen as offer less variety because organization increases the similarity (and reduces the variety) of proximate (local) pairs.

We end the paper by considering the implications of the research for constructing real world assortments. We also discuss the likely effects on variety perceptions when people approach assortments in a choice as opposed to evaluation mode. We also identify other applications for our variety metric including: choosing stimuli for concept testing; product extensions and positioning; hot deck imputation; and experimental design for conjoint analysis.

 

"HIGH SATIETY: VARIETY SEEKING ON SENSORY-BASED ATTRIBUTES"

Jeffrey Inman, University of Wisconsin, Madison

We examine product feature-based heterogeneity in choice behavior through a latent segmentation approach capturing variety seeking and promotion cue utilization. Specifically, we construct a model that can be used to identify those product features on which some segments seek variety (i.e., negative state dependence) while other segments exhibit reinforcement behavior (i.e., positive state dependence). We argue that "variety seeking" features tend to interact more directly with consumers’ sensory systems. Further, we examine variability in how consumers process promotional price reduction information and argue that some consumers seek to simplify their choice process by seeking easy-toprocess cues such as the simple presence of a price reduction or an in-store display. Finally, we present theory suggesting that these two segments should be distinct.

We use household scanner panel data containing two years of purchases by over 300 single-person households to test our hypotheses. Three segments emerge: a variety seeking segment (25%), a promotion cue seeking segment (18%), and a reinforcement behavior segment (57%). The results largely support prediction. Variety seekers make more product-based choices and seem particularly sensitive to product features which interact with sensory systems. In contrast, promotion cue seekers make more context-based choices; they appear more sensitive to price reductions and in-store displays, but seem less sensitive to store ads and product features. Implications for researchers and practitioners are discussed.

 

"REDUCING ITEM SELECTION AT AN ONLINE GROCER: WHICH CATEGORIES TO CUT AND WHY"

Joseph C. Nunes, University of Southern California

Peter Boatwright, Carnegie-Mellon University

Reducing product offerings can help reduce labor and inventory costs and raise profits for the consumer-direct grocer. How many stock-keeping items to warehouse and which SKUs to cut wthout affecting category sales is an important question to all retailers. Retailers often would like to cut the number of items they offer, increasing efficiency and cutting costs, without reducing sales. Yet not all categories are the same. The central question examined in this session is: "Which categories are most sensitive to reductions in assortment and how deep of cuts are too deep, in that they significantly reduce sales in that category?" The natural follow-up question is, "Why?"

We examine the purchase behavior of shoppers in a major market of a national online grocer. The data analyzed cover dozens of categories that originally contained more than 10,000 SKUs. More than half of these SKUs were subsequently eliminated. The data include hundreds of thousands of item-specific purchases made both before and after the cuts. The data are recent, dating between October 1996, when the service began in this market,until January 1998, when we began this research.

Controlling for seasonality, promotions etc., we look at category sensitivity to SKU reductions using a stochastic model of interpurchase times. After determining which categories are more or less sensitive, a number of possible explanations (categories high or low in assortment, variety-seeking, etc.) are proposed and tested. The results allow managers to avoid making cuts in inappropriate categories, where too little assortment can drive consumers to shop elsewhere (affect store choice) or reduce purchases in the category all together.

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