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ProductAssortmentReview Chernev 2012 PDF
ProductAssortmentReview Chernev 2012 PDF
in
Marketing
Vol. 6, No. 1 (2011) 1–61
c 2012 A. Chernev
DOI: 10.1561/1700000030
Contents
1 Introduction 2
7 Conclusion 48
References 49
Foundations and Trends R
in
Marketing
Vol. 6, No. 1 (2011) 1–61
c 2012 A. Chernev
DOI: 10.1561/1700000030
Alexander Chernev
Abstract
The topic of product assortment has generated a plethora of research
across various domains, including economics, analytical and empirical
modeling, individual and group decision making, and social psychology.
Despite the voluminous assortment research, however, the key findings
have remained scattered across domains. In fact, the very domain of
assortment research has not been clearly defined, thus complicating the
understanding of the current state of assortment research. The goal of
this review, therefore, is to define the field of assortment research and
outline its key findings. In this context, this review delineates three key
domains of assortment research: (1) how consumers perceive the variety
of items in an assortment, (2) how consumers choose an item from a
given assortment, and (3) how consumers choose among assortments.
The key findings in each of these three areas are synthesized in the form
of specific research propositions that build on the existing findings and
provide guidance for further empirical investigation. By outlining the
key findings in each of these three areas, this review offers an integrative
framework for understanding the impact of assortment on consumer
choice.
1
Introduction
2
3
4
2.2 Assortment Structure and Perceived Assortment Variety 5
10
3.1 Purchase Likelihood 11
in the choice set, the higher the likelihood that consumers can find an
option matching their purchase goals (Baumol and Ide, 1956; Betan-
court and Gautschi, 1990; Hotelling, 1929; Kahn and Lehmann, 1991;
Kahneman et al., 1997; see Lancaster, 1990 for a review). A related
economic explanation of consumer preferences for larger assortments
involves the greater efficiency of time and effort involved in identifying
the available alternatives in the case of one-stop shopping associated
with retailers offering larger assortments (Betancourt and Gautschi,
1990; Messinger and Narasimhan, 1997; Miller et al., 1999).
It has also been proposed that larger assortments might lead to
stronger preferences because they offer option value (Reibstein et al.,
1975) and allow consumers to maintain flexibility in light of uncertainty
about future tastes (Kahn and Lehmann, 1991; Kreps, 1979; Kahne-
man and Snell, 1992; March, 1978; Shin and Ariely, 2004; Walsh, 1995)
and accommodate their future variety-seeking behavior (McAlister,
1982; Pessemier, 1978; Ratner et al., 1999; Simonson, 1990; Read and
Loewenstein, 1995; Inman, 2001; Levav and Rui (Juliet) Zhu, 2009; Van
Herpen and Pieters, 2002, 2007; van Trijp et al., 1996).
It has further been argued that consumers might experience addi-
tional utility simply from having multiple items in the choice set
(Kahn et al., 1987; see also Broniarczyk et al., 1998; Oppewal and
Koelemeijer, 2005), a proposition consistent with the view that larger
assortments might influence preferences by creating a perception
of freedom of choice (Brehm, 1972) and perceived personal control
(Inesi et al., 2011). Larger assortments may also enhance the enjoy-
ment of shopping (Babin et al., 1994) and the overall choice satisfac-
tion (Botti and Iyengar, 2004), as well as provide buyers with a greater
opportunity to learn about the range of available products (Bellenger
and Korgaonkar, 1980).
Finally, it has been proposed that larger assortments influence con-
sumer preferences by reducing the uncertainty of whether the choice set
at hand adequately represents all potentially available options. Recent
experiments show that consumers may delay their purchasing because
they are uncertain about the degree to which the available set is repre-
sentative of the entire set of possible options (Greenleaf and Lehmann,
1995; Karni and Schwartz, 1977). To illustrate, consumers might feel
12 Choosing from an Assortment
more confident when selecting from a retailer that offers a larger assort-
ment because it is less likely that a potentially superior alternative is
not represented in the available choice set.
Despite their multiple benefits, larger assortments have been iden-
tified as having a number of important drawbacks. From a retailer’s
standpoint, larger assortments are often considered less desirable for
cost-related reasons, such as inventory, shelf space, and financing costs
(Bayus and Putsis Jr., 1999; Kurt Salmon Associates, 1993; Lancaster,
1990; Lehmann, 1998; Moorthy, 1984; The Partnering Group, 1998).
From a consumer’s standpoint, it has been proposed that the
benefits of greater variety are, at least partially, offset by a corre-
sponding increase in consumers’ costs associated with choosing from
a larger assortment. Recent research has shown that reducing the size
of an assortment can actually increase the purchase likelihood from
that assortment. To illustrate, Broniarczyk et al. (1998) have docu-
mented that reductions (up to 54%) in the lower selling SKUs often
have no significant impact on variety perceptions and sales. Related
research has further shown that deleting less popular SKUs can actu-
ally increase aggregate sales, whereby a 10% SKU reduction resulted in
a 4% sales increase (Dreze et al., 1994). Similar results were reported by
Boatwright and Nunes (2001) in a natural experiment in which decreas-
ing the assortment in nearly all product categories offered by a retailer
resulted in a significant increase in sales.
One of the first field experiments empirically documenting the draw-
backs of larger assortments involved comparing consumer reactions to
different assortments of gourmet jams (Iyengar and Lepper, 2000). In
this context, it was shown that consumers were more likely to make a
purchase when being presented with an assortment comprising six items
than with an assortment comprising 24 items (30% versus 3%). Similar
findings have been documented in a variety of product categories, such
as chocolates (Berger et al., 2007; Chernev, 2003b), consumer electron-
ics (Chernev, 2003a), and mutual funds (Iyengar et al., 2004; Huberman
et al., 2007; Iyengar, 2010; Morrin et al., 2008).
The negative consequences of larger assortments have been
attributed to several factors. It has been argued that making a choice
from larger assortments requires greater cognitive effort than choosing
3.1 Purchase Likelihood 13
purchase occasions consumers tend to buy the same flavor, brand, and
package size, whereas within a single purchase occasion they tend to
buy different flavors, even though they buy the same brand and package
size. This finding has been attributed to the fact that in mature product
categories there is little uncertainty about the performance associated
with any particular brand, size, or flavor; the key uncertainty with
individuals’ own future preferences. To hedge against this uncertainty,
consumers are likely to prefer assortments with a greater selection of
preference-specific attributes, such as diverse flavors. Following this
line of reasoning, one could argue that in novel product categories
without established brands and with varying product quality, con-
sumers might seek brand variety across, as well as within, purchase
occasions.
Consumers’ propensity to select a greater variety of items in com-
bined versus separate choices is often referred to as diversification bias.
Thus, when choosing multiple goods for future consumption over time,
consumers tend to overestimate their preference for variety and end up
choosing more diverse options. This overestimation has been attributed
to several factors, including diversification, information search, time
contraction, and choice bracketing (Read and Loewenstein, 1995). In
this context, diversification is related to uncertainty about one’s own
preferences about products, as well as uncertainty about the products’
actual performance. By selecting a variety of options, consumers can
mitigate the risk of putting all their eggs in one basket and select-
ing large quantities of an ultimately undesirable product (Kahn and
Lehmann, 1991; Simonson, 1990).
Diversification bias has also been attributed to consumers’
information-seeking behavior stemming from the desire to identify more
desirable products through trial and error. Diversification bias can
also be accounted for by time contraction, in which people tend to
underweight the interconsumption interval (Kahneman and Snell, 1992;
Gourville, 1998). This is consistent with the general finding of duration
neglect, in which the ratings of the overall utility of pleasure and pain
are insensitive to the duration of these sequences (Fredrickson and Kah-
neman, 1993). Finally, diversification bias can be attributed to choice
3.3 Option Choice 27
29
30 Choosing Among Assortments
that the preference for larger assortments tends to increase when con-
sumers expect to have to justify their decision to others (Ratner and
Kahn, 2002). A number of empirical studies have shown that retailers
offering larger assortments tend to attract more customers, as well as
customers from greater distances, than retailers offering smaller assort-
ments (Amine and Cadenat, 2003; Arnold et al., 1983; Dhar et al.,
2001; Louviere and Gaeth, 1987).
Consumer preference for larger assortments has been attributed
to the fact that when choosing among assortments consumers seek
to maximize decision flexibility and “hedge” against future preference
uncertainty (McAlister and Pessemier, 1982). In this context, larger
assortments offer a greater variety of options, which, in turn, increase
the probability of a better fit between a consumer’s preferences and the
available choice alternatives.
Recent research has argued that in addition to increased deci-
sion flexibility, consumer choice among assortments can also be influ-
enced by the anticipated costs of selecting an option from the larger
assortment. Thus, it has been proposed that consumers can choose to
forgo the greater option variety and decision flexibility associated with
larger assortments in order to minimize the cognitive effort in evalu-
ating choice alternatives and simplify the choice of an option from the
selected assortment (Chernev, 2006a; Huffman and Kahn, 1998).
Consumer choice among assortments can be better understood when
considered in the context of a conceptual framework that views choice
as a hierarchical decision process comprising two different stages: select-
ing an assortment and, subsequently, selecting an option from that
assortment (Kahn and Lehmann, 1991; Kahn et al., 1987; Arentze et al.,
2005; Cachon and Kok, 2007; Sood et al., 2004; Tversky and Sattath,
1979). In this context, consumers’ assortment-size preferences have
been attributed to the nature of the consumer decision process and, in
particular, to the degree to which these two stages of the overall deci-
sion are considered jointly versus separately (Chernev, 2006a; see also
Sood et al., 2004). Thus, increasing consumers’ awareness of the item-
selection task tends to increase the likelihood that consumers will view
the assortment choice as a single decision (instead of two independent
4.1 The Impact of Assortment Size on Choice among Assortments 31
choices) and, therefore, select the assortment that optimizes their choice
of an item. When the choice of an assortment and the subsequent item
selection are viewed as two independent decisions, choosing the larger
assortment is perceived as the optimal strategy. However, when con-
sidering both decisions jointly, consumers who believe that choosing an
item from the larger assortment is going to be difficult are also less
likely to prefer the larger assortment to a smaller one. Thus, by vary-
ing the decision focus, it is possible to systematically vary consumers’
choice among assortments.
Consumer choice among assortments is also influenced by the attrac-
tiveness of the options. Thus, some assortments comprise options that
are, on average, of higher quality and, hence, are likely to be per-
ceived as more attractive (e.g., Nordstrom, Neiman Marcus, and Whole
Foods). In contrast, other assortments comprise options that are, on
average, of lower quality and are likely to be perceived as relatively
less attractive (e.g., dollar stores, Value City, and K-Mart). In addi-
tion, some assortments can be perceived as more attractive because the
items they carry match customer preferences. To illustrate, assortments
comprising bestseller items that are likely to appeal to the majority of
consumers are likely to be perceived, on average, as more attractive
than assortments comprising less popular items.
Recent research has further shown that consumer choice among
assortments is a function of the attractiveness of the options con-
tained in these assortments, such that smaller assortments tend to
be more preferred when choosing among assortments comprising rel-
atively more attractive options than when choosing among assort-
ments comprising relatively less attractive options (Chernev and Hamil-
ton, 2009). To illustrate, when choosing between a retailer carrying a
larger assortment and one carrying a smaller assortment, consumers
are more likely to prefer the latter when both assortments comprise
relatively more attractive options than when they comprise relatively
less attractive options. Anecdotal evidence from the ice cream indus-
try suggests that flavor assortments are correlated with quality, such
that higher end manufacturers (e.g., Haagen-Dazs) tend to offer less
variety than lower end manufacturers, and higher end product lines
32 Choosing Among Assortments
offer less variety of flavors than lower end product lines (Kochak, 1985;
Shugan, 1989).
This finding is attributed to the notion that in the case of assort-
ments comprising relatively attractive options, the marginal benefit
from having a larger assortment to choose from is likely to be less
than in the case of assortments comprising relatively less attrac-
tive options — a proposition consistent with the concavity of the
value function (Bernoulli, 1738; Kahneman and Tversky, 1979; Nowlis
and Simonson, 1996; Chandon and Wansink, 2007). With respect to
consumer choice among assortments, the diminishing marginal value
principle implies that increasing the attractiveness of the options in
both larger and smaller assortments is likely to bring the assort-
ments closer together in terms of the benefits consumers perceive. As a
result, the perceived difference between these assortments will decrease
with the increase of the options’ attractiveness, which, in turn, will
decrease the relative advantage of the larger set. The impact of option
attractiveness on choice among assortments has been empirically shown
not only to have a significant impact on consumer preferences but
also to lead to a preference reversal in favor of the smaller assortment
(Chernev and Hamilton, 2009).
The discussion of the impact of assortment size on choice among
assortments can be summarized in the following propositions:
P3.1 : Consumer choice among assortments is a function of assort-
ment size and consumers’ decision focus. In particular, larger
assortments tend to be more preferred (relative to smaller
assortments) in cases when consumers focus primarily on the
assortment-choice task than in cases when consumers focus
primarily on the task of choosing an item from an already
selected assortment.
P3.2 : Consumer choice among assortments is a function of assort-
ment size and the attractiveness of items included in these
assortments. In particular, smaller assortments tend to be
more preferred when the attractiveness of the options com-
prising the available assortments is high rather than when
it is low. Furthermore, the relationship between assortment
4.2 The Impact of Assortment Structure on Choice among Assortments 33
37
38 Developing an Agenda for Further Research
Assortment factors:
Assortment size
Assortment organization
Option differentiation
Consumer factors:
Expertise
Decision task
Perceived
assortment variety
Decision outcomes
Purchase likelihood
Choice among Choice from Purchase quantity
assortments an assortment Option selection
Strength of preferences
Assortment factors:
Assortment size
Assortment organization
Option differentiation
Option attractiveness
Consumer factors:
Expertise
Preference uncertainty
Consumer goals
Decision task
Antecedents of assortment choice
Fig. 5.1 Research framework for investigating the impact of product assortment on con-
sumer choice.
developing countries, in which consumers are for the first time faced
with making choices from multiple options, which is typical for the U.S.
retail environment. Identifying strategies to help consumers make bet-
ter choices when faced with complex decisions is an important area for
further investigation (Botti and Iyengar, 2006; Mick et al., 2004).
Most of the research has focused on the cognitive aspects of assort-
ment choice, involving issues such as information load and cognitive
effort, which are associated with evaluating the choice options. Further
research is needed to investigate the affective (e.g., regret) and motiva-
tional (e.g., focus on maximizing gains or minimizing losses) aspects of
choice. In addition, it is important to establish the interplay between
the cognitive, affective, and motivational aspects of consumer decision
processes. For example, an interesting question involves the possibil-
ity of influencing the perceived decision difficulty of the choice task by
varying consumers’ motivation for making the decision, by influencing
their affective evaluation of the decision outcome, as well as by structur-
ing the decision process (Levav et al., 2010). Investigating assortment
choice in the broader context of decision processes is a fruitful venue
for further investigation.
An important area for further investigation involves the develop-
ment of an integrative model of managerial decision making that incor-
porates individual-level decision factors identified in prior behavioral
research. Indeed, when modeling consumer preferences for a product
in a given assortment, most quantitative research makes the implicit
assumption that a product’s utility is relatively independent from the
utility of the other available options (Misra, 2008). The behavioral
research discussed in this review suggests, however, that this simplify-
ing assumption might lead to biased estimates of consumer preferences
and purchase behavior. In this context, developing models that esti-
mate the utility of any given option as a function of the other available
options is an important area for further research.
On a more general level, assortment research can benefit from a
quantitative approach to analyzing the prior findings. The existence of
a variety of factors that are likely to influence assortment choice calls
for a model-driven meta-analytic approach (e.g., Becker, 2001) that
aims to identify the theoretical drivers that determine the impact of
41
42
6.1 Strategies for Optimizing the Assortment 43
likely to loom large, while the potential drawbacks (e.g., the diffi-
culty of selecting a single option) seem less important. In contrast,
when consumers are choosing a specific option from an already selected
assortment, the disadvantages of a large assortment become very promi-
nent. This implies that communication strategies need to consider the
stage of the consumer decision process. Promoting assortment size is
likely to be more beneficial when consumers are selecting a retailer. On
the other hand, when consumers are shopping for a particular option,
communications that will help them navigate through the plethora of
available alternatives might be more appropriate.
7
Conclusion
During the past two decades there has been substantial amount
of research investigating consumer reaction to product assortment.
This review groups prior studies into three main categories to define
the domain of assortment research: (1) research examining consumer
perceptions of assortment variety, (2) research studying consumer
choice from an assortment, and (3) research focused on consumer choice
among assortments. Some of the key findings in each of these three areas
were synthesized in the form of specific research propositions that can
be used to facilitate managerial decisions as well as to guide further
empirical research. Testing the validity of these propositions in differ-
ent contexts — both in theory and practice — as well as identifying
new factors that influence consumer reaction to product assortments is
a fruitful area for research.
48
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49
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