IDEAS home Printed from https://ideas.repec.org/a/spr/fobric/v11y2017i1d10.1186_s11782-017-0017-3.html
   My bibliography  Save this article

Heterogeneous consumers, search and retail formats

Author

Listed:
  • Mingming Shi

    (Business School, Renmin University of China)

  • Xiao Yan

    (Business School, Renmin University of China)

Abstract

This paper proposes a model featuring the heterogeneity of consumer preferences and analyzes the multiple equilibrium of retail formats by building a map of the relationships between consumer heterogeneity and retail formats. The key questions analyzed in this paper are how the retailer adjusts its combination of marketing elements through repositioning and how innovation in retail formats is implemented to match consumers’ heterogeneous preferences in a market with consumer search costs. Unlike recent research, our model, by taking different consumer preference structures into account, introduces consumer psychological costs into the Ehrlich-Fisher model and deduces the existence of different retail formats and their multiple equilibriums. We find that consumer heterogeneity, retailers’ diversified transfer costs and economies of scale are endogenous drivers of prosperous retail formats. Accordingly, diversified retail formats with complementary functions and differentiated services can be described as the horizontal extensions and interface changes of the retailing industry.

Suggested Citation

  • Mingming Shi & Xiao Yan, 2017. "Heterogeneous consumers, search and retail formats," Frontiers of Business Research in China, Springer, vol. 11(1), pages 1-16, December.
    • Handle: RePEc:spr:fobric:v:11:y:2017:i:1:d:10.1186_s11782-017-0017-3
    DOI: 10.1186/s11782-017-0017-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s11782-017-0017-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s11782-017-0017-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kopalle, Praveen & Biswas, Dipayan & Chintagunta, Pradeep K. & Fan, Jia & Pauwels, Koen & Ratchford, Brian T. & Sills, James A., 2009. "Retailer Pricing and Competitive Effects," Journal of Retailing, Elsevier, vol. 85(1), pages 56-70.
    2. Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, number gril92-1, March.
    3. Betancourt, Roger R. & Chocarro, Raquel & Cortiñas, Monica & Elorz, Margarita & Mugica, Jose Miguel, 2016. "Channel Choice in the 21st Century: The Hidden Role of Distribution Services," Journal of Interactive Marketing, Elsevier, vol. 33(C), pages 1-12.
    4. Sorescu, Alina & Frambach, Ruud T. & Singh, Jagdip & Rangaswamy, Arvind & Bridges, Cheryl, 2011. "Innovations in Retail Business Models," Journal of Retailing, Elsevier, vol. 87(S1), pages 3-16.
    5. Roger Betancourt & David Gautschi, 1990. "Demand Complementarities, Household Production, and Retail Assortments," Marketing Science, INFORMS, vol. 9(2), pages 146-161.
    6. Walter Y. Oi, 1992. "Productivity in the Distributive Trades: The Shopper and the Economies of Massed Reserves," NBER Chapters, in: Output Measurement in the Service Sectors, pages 161-193, National Bureau of Economic Research, Inc.
    7. Roger Betancourt & Monica Cortiñas & Margarita Elorz & Jose Mugica, 2007. "The demand for and the supply of distribution services: A basis for the analysis of customer satisfaction in retailing," Quantitative Marketing and Economics (QME), Springer, vol. 5(3), pages 293-312, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shaolong Tang & Stella Cho & Jacqueline Wenjie Wang & Hong Yan, 2018. "The newsvendor model revisited: the impacts of high unit holding costs on the accuracy of the classic model," Frontiers of Business Research in China, Springer, vol. 12(1), pages 1-14, December.
    2. Kerry Liu, 2020. "Chinese consumer finance: a primer," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-22, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keh, Hean Tat & Chu, Singfat, 2003. "Retail productivity and scale economies at the firm level: a DEA approach," Omega, Elsevier, vol. 31(2), pages 75-82, April.
    2. Betancourt, Roger R. & Chocarro, Raquel & Cortiñas, Monica & Elorz, Margarita & Mugica, Jose Miguel, 2017. "Private Sales Clubs: A 21st Century Distribution Channel," Journal of Interactive Marketing, Elsevier, vol. 37(C), pages 44-56.
    3. Shankar, Venkatesh & Inman, J. Jeffrey & Mantrala, Murali & Kelley, Eileen & Rizley, Ross, 2011. "Innovations in Shopper Marketing: Current Insights and Future Research Issues," Journal of Retailing, Elsevier, vol. 87(S1), pages 29-42.
    4. David Lagakos, 2009. "Superstores or mom and pops? Technolgy adoption and productivity differences in retail trade," Staff Report 428, Federal Reserve Bank of Minneapolis.
    5. Boon Lee, 2011. "Distribution Trade Sector Output and Productivity Performance: A Case Study of Singapore and Hong Kong 2001-2008," School of Economics and Finance Discussion Papers and Working Papers Series 270, School of Economics and Finance, Queensland University of Technology.
    6. Emek Basker & Lucia Foster & Shawn Klimek, 2017. "Customer‐employee substitution: Evidence from gasoline stations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 876-896, December.
    7. Jonathan Haskel & Raffaella Sadun, 2012. "Regulation and UK Retailing Productivity: Evidence from Microdata," Economica, London School of Economics and Political Science, vol. 79(315), pages 425-448, July.
    8. Etienne Gagnon & David López-Salido & Jason Sockin, 2017. "The Cyclicality of Sales, Regular, and Effective Prices: Business Cycle and Policy Implications: Comment," American Economic Review, American Economic Association, vol. 107(10), pages 3229-3242, October.
    9. Betancourt, Roger R. & Chocarro, Raquel & Cortiñas, Monica & Elorz, Margarita & Mugica, Jose Miguel, 2016. "Channel Choice in the 21st Century: The Hidden Role of Distribution Services," Journal of Interactive Marketing, Elsevier, vol. 33(C), pages 1-12.
    10. World Bank Group, 2016. "Malaysia Economic Monitor, December 2016," World Bank Publications - Reports 25857, The World Bank Group.
    11. Ratchford, Brian & Soysal, Gonca & Zentner, Alejandro, 2023. "Multichannel customer purchase behavior and long tail effects in the fashion goods market," Journal of Retailing, Elsevier, vol. 99(1), pages 46-65.
    12. López-Salido, J David & Gagnon, Etienne & Sockin, Jason, 2015. "The Cyclicality of Sales, Regular and Effective Prices: Comment," CEPR Discussion Papers 10726, C.E.P.R. Discussion Papers.
    13. Ratchford, Brian & Soysal, Gonca & Zentner, Alejandro & Gauri, Dinesh K., 2022. "Online and offline retailing: What we know and directions for future research," Journal of Retailing, Elsevier, vol. 98(1), pages 152-177.
    14. NAKAJIMA Takanobu, 2007. "Is Retail Service Productivity Really Low in Japan? -- Numerical experiment based on Shepard's model --," ESRI Discussion paper series 193, Economic and Social Research Institute (ESRI).
    15. Peter Mayerhofer & Peter Huber & Dieter Pennerstorfer, 2017. "Handel und Einzelhandel im Wiener Beschäftigungssystem. Arbeitsmarktrelevanz, Arbeitsplatzcharakteristika, absehbare Herausforderungen," WIFO Studies, WIFO, number 61951, April.
    16. Gauri, Dinesh K. & Jindal, Rupinder P. & Ratchford, Brian & Fox, Edward & Bhatnagar, Amit & Pandey, Aashish & Navallo, Jonathan R. & Fogarty, John & Carr, Stephen & Howerton, Eric, 2021. "Evolution of retail formats: Past, present, and future," Journal of Retailing, Elsevier, vol. 97(1), pages 42-61.
    17. Roger Betancourt & Monica Cortiñas & Margarita Elorz & Jose Mugica, 2007. "The demand for and the supply of distribution services: A basis for the analysis of customer satisfaction in retailing," Quantitative Marketing and Economics (QME), Springer, vol. 5(3), pages 293-312, September.
    18. Emek Basker & Lucia Foster & Shawn Klimek, 2017. "Customer-employee substitution: Evidence from gasoline stations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 876-896, December.
    19. Grewal, Dhruv & Ailawadi, Kusum L. & Gauri, Dinesh & Hall, Kevin & Kopalle, Praveen & Robertson, Jane R., 2011. "Innovations in Retail Pricing and Promotions," Journal of Retailing, Elsevier, vol. 87(S1), pages 43-52.
    20. Barros, Carlos Pestana & Williams, Jonathan, 2013. "The random parameters stochastic frontier cost function and the effectiveness of public policy: Evidence from bank restructuring in Mexico," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 98-108.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:fobric:v:11:y:2017:i:1:d:10.1186_s11782-017-0017-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.