How Product Assortments Affect Buyer Preferences: Empirical Analysis of the Robustness of the Compromise Effect

Holger Müller (), Eike Kroll and Bodo Vogt ()
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Holger Müller: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Bodo Vogt: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Authors registered in the RePEc Author Service: Holger Mueller

No 9031, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: Behavioral research revealed that product assortments can influence buyer preferences and affect purchase decisions between options of a product line. In this article, the compromise effect is investigated according to which the share of a product is expected to increase when it is in an intermediate position in an assortment subset. Since most of the previous studies on the compromise effect used artificial designs that lack realism, a limited external validity of experimental findings is to be supposed. This is a drawback, especially when decisions about compositions of real product lines should be supported. Therefore, an enhanced experimental design is presented with subjects making unforced and binding choices between real brands, which is similar to regular purchase decisions. Although results of our studies prove robustness, the magnitude of the compromise effect is significantly reduced in such real marketplace scenarios hence notably influencing predictions of sales and profitability of product lines.

Keywords: Consumer Behavior; Compromise Effect; Consumer Preferences; Assortment Planning; Experimental Design; Choice in Context (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-10
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