Consideration Sets and Competitive Marketing

Ran Spiegler () and Kfir Eliaz

No 7456, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a market model in which competing firms use costly marketing devices to influence the set of alternatives which consumers perceive as relevant. Consumers in our model are boundedly rational in the sense that they have an imperfect perception of what is relevant to their decision problem. They apply well-defined preferences to a ?consideration set?, which is a function of the marketing devices employed by the firms. We examine the implications of this behavioral model in the context of a competitive market model, particularly on industry profits, vertical product differentiation, the use of marketing devices and consumers? conversion rates.

Keywords: Advertising; Bounded rationality; Consideration sets; Irrelevant alternatives; Limited attention; Marketing; Persuasion (search for similar items in EconPapers)
JEL-codes: C72 D03 D11 D21 D43 (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-com, nep-cse, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Consideration Sets and Competitive Marketing (2011)
Working Paper: Consideration Sets and Competitive Marketing (2009)
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