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

Author

Listed:
  • Holger Müller

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Eike Benjamin Kroll

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Bodo Vogt

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

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.

Suggested Citation

  • Holger Müller & Eike Benjamin Kroll & Bodo Vogt, 2009. "How Product Assortments Affect Buyer Preferences: Empirical Analysis of the Robustness of the Compromise Effect," FEMM Working Papers 09031, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:09031
    as

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    File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2009_Dateien/2009_31.pdf
    File Function: First version, 2009
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    References listed on IDEAS

    as
    1. Gibson, David R. & Sharp, Gunter P., 1992. "Order batching procedures," European Journal of Operational Research, Elsevier, vol. 58(1), pages 57-67, April.
    2. Stutzle, Thomas, 2006. "Iterated local search for the quadratic assignment problem," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1519-1539, November.
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