The Effect of Assortment Changes on Consideration Set Formation

Abstract

Product assortment is one of the most important determinants of store performance. Past studies have shown that a reduction in the number of items can alter sales. This paper examines the impact of assortment changes on the formation of the consumer consideration set when an item is delisted as well as when a new item is introduced. We employed a choice model that incorporates the consideration effect based on the theory of search and applied this model to scanner data in the toothpaste category. We found that when an item was eliminated, its former buyers adjusted their consideration set by replacing the delisted item with items sharing common key attributes with it, followed by promoted and low-priced items. Furthermore, the consideration set was affected by the introduction of a new item in a way that the newly introduced item drew a large share of consideration from items that were similar in terms of product attributes. Keywords: Product Assortment, Consideration Set, Brand Choice To cite this document: Wirawan Dony Dahana, "The Effect of Assortment Changes on Consideration Set Formation", Contemporary Management Research, Vol.9, No.3, pp.231-246, 2013. Permanent link to this document: http://dx.doi.org/10.7903/cmr.11020