Heterogeneous consumers, search and retail formats

Heterogeneous consumers, search and retail formats 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Frontiers of Business Research in China Springer Journals

Heterogeneous consumers, search and retail formats

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Publisher
Springer Singapore
Copyright
Copyright © 2017 by The Author(s).
Subject
Business and Management; Business and Management, general; Accounting/Auditing; Business Finance; Organization; Human Resource Management; Marketing
ISSN
1673-7326
eISSN
1673-7431
D.O.I.
10.1186/s11782-017-0017-3
Publisher site
See Article on Publisher Site

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.

Journal

Frontiers of Business Research in ChinaSpringer Journals

Published: Dec 1, 2017

References

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