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A simultaneous model of multiple-discrete choices of variety and quantity

Author

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  • van der Lans, Ralf

Abstract

In many categories, consumers purchase discrete quantities of multiple varieties. For example, when doing grocery shopping for cereals, consumers may purchase in each category three units of brand A, four of brand B, and one of brand C. These decisions are often influenced by nonlinear pricing strategies such as quantity discounts. Modeling such multiple-discrete choices is challenging, as they violate assumptions of standard choice models. In this research, the author introduces a computationally attractive choice model that simultaneously captures 1) variety, 2) discrete quantity, and 3) nonlinear pricing strategies, such as quantity discounts. The model assumes that consumers maximize variety of the choice outcome, while taking into account constraints on utilities of alternatives. Application of the proposed model to two datasets demonstrates the superior fit compared to several rival models. Counterfactual analyses demonstrate that the model is a valuable tool for assortment and pricing decisions.

Suggested Citation

  • van der Lans, Ralf, 2018. "A simultaneous model of multiple-discrete choices of variety and quantity," International Journal of Research in Marketing, Elsevier, vol. 35(2), pages 242-257.
    • Handle: RePEc:eee:ijrema:v:35:y:2018:i:2:p:242-257
    DOI: 10.1016/j.ijresmar.2017.12.007
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    Cited by:

    1. Philippe Aurier & Victor D. Mejía, 2021. "The differing impacts of brand-line breadth and depth on customers’ repurchasing behavior of frequently purchased packaged goods," Journal of the Academy of Marketing Science, Springer, vol. 49(6), pages 1244-1266, November.
    2. Sanghak Lee & Sunghoon Kim & Sungho Park, 2022. "A sequential choice model for multiple discrete demand," Quantitative Marketing and Economics (QME), Springer, vol. 20(2), pages 141-178, June.
    3. Kim, Youngju & Hardt, Nino & Kim, Jaehwan & Allenby, Greg M., 2022. "Conjunctive screening in models of multiple discreteness," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 1209-1234.

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