The Dual Impact of Product Line Length on Consumer Choice

2021 ◽  
Author(s):  
Wei‐Lin Wang ◽  
Demetrios Vakratsas
Keyword(s):  
Consumer Choice ◽  
Line Length ◽  
Product Line

Product-Line Length as a Competitive Tool

2005 ◽  
Vol 14 (1) ◽  
pp. 1-28 ◽  
Author(s):  
Michaela Draganska ◽  
Dipak C. Jain
Keyword(s):  
Line Length ◽  
Product Line

scholarly journals Product Line Pricing under Marginal Moment Model with Network Effect

Complexity ◽  
2019 ◽  
Vol 2019 ◽  
pp. 1-13
Author(s):  
Wei Qi ◽  
Xinggang Luo ◽  
Xuwang Liu ◽  
Yang Yu ◽  
Zhongliang Zhang
Keyword(s):  
Market Share ◽  
Consumer Choice ◽  
Optimization Design ◽  
Choice Behavior ◽  
Optimization Problems ◽  
Gumbel Distribution ◽  
Product Line ◽  
Network Effect ◽  
Mnl Model ◽  
Consumer Choice Behavior

The complex network effect of the product exhibits has a significant impact on the product line optimization design. The multinomial logit (MNL) model which is used to simulate consumer choice behavior is applied in most of product line optimization problems. However, its assumptions, independence of irrelevant alternatives (IIA) and the same Gumbel distribution of random error terms, are usually difficult to be met in practice. The marginal moment model (MMM) can be used when the mean and variance of consumer’s utility error are known. The MMM not only has weak assumption conditions but also overcomes the IIA problem of MNL model. In this paper, we study the product pricing problem based on MMM with endogenous negative network effect. Firstly, we construct a variant of MMM considering network effect in product line optimization design. Secondly, we prove that the revenue function is concave in market share. We propose the solving methods of the model to obtain the optimal price, the corresponding market share, and the revenue under three different scenarios, i.e., developing single product, homogeneous products, and heterogeneous products. Finally, numerical experiments show that the proposed model can better simulate consumer choice behavior and potentially increase revenue.

scholarly journals Local brand entry and incumbent variety response: evidence from the ice cream market

2021 ◽  
pp. 1-19
Author(s):  
Xiao Dong ◽  
H. Allen Klaiber
Keyword(s):  
Natural Experiment ◽  
Ice Cream ◽  
Line Length ◽  
Product Line ◽  
Retail Sector ◽  
Quality Changes ◽  
Difference In Differences ◽  
Nonprice Competition ◽  
Product Choices ◽  
Retail Setting

Abstract We investigate incumbent brands’ response to entry and increased competition in a large retail setting. We extend the nonprice competition and manufacturer stocking literatures by examining if incumbent brands increase quality, specifically increasing the number of varieties (product-line length), in response to entry of a new local brand in the ice cream market. We use the entry of a new, local, super-premium ice cream brand in a large supermarket chain as a quasi-natural experiment and empirically examine if incumbent ice cream brands increased the product-line length in stores carrying the new brand. Using Poisson difference-in-differences estimators, we find that incumbent brands increased the number of varieties offered by 0.9 (3 percent) after the new brand's entry, with most of the responses coming from super-premium ice cream, which increased the number of varieties offered by 2.9 (12 percent) product choices. These findings contribute new insights into quality changes, manufacturer stocking decisions, and nonprice competition associated with entry of a local brand into the food retail sector.

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