Papers by Naufel Vilcassim
Journal of Marketing, Sep 1, 2016
Retailers determine the assortment for a mix of product categories in a particular space (e.g., t... more Retailers determine the assortment for a mix of product categories in a particular space (e.g., the checkout aisle, endcaps, freezer space). Within such a “target” space, shoppers are exposed to a selection of product categories that are not necessarily correlated in consumption. In this article, the authors examine whether the assortment of one category affects consumers’ purchase incidence decision in another, independent category that shares a common display space (e.g., frozen meals and ice cream). They use a multivariate probit model of purchase incidence and incorporate assortment variety captured by an entropy measure. Results from analyses of IRI data and an online experiment provide strong evidence that consumers are less likely to purchase from a category of a given assortment when it is presented with another category assortment of greater variety and that this effect is driven by the display proximity. Furthermore, results from an eye-tracking study indicate consumers’ allocation of limited attention to category assortments as an explanation for the finding. This work serves as one of the first studies to document the impact of product assortment beyond a focal category, and the results highlight a limitation of individual category management when grocery retailers make product assortment decisions.
Economics Letters, Feb 1, 2014
ABSTRACT We show that a seasonal good could be priced countercyclically due to the heterogeneous ... more ABSTRACT We show that a seasonal good could be priced countercyclically due to the heterogeneous seasonal shifts in consumer valuations. We provide empirical support for our explanation based on two product categories (canned soup and tuna) studied in the literature.
Quantitative marketing and economics, Mar 1, 2004
An important question for retailers is whether promotions induce households to increase their in-... more An important question for retailers is whether promotions induce households to increase their in-store expenditures or merely reallocate a predetermined shopping budget. Should expenditures be fixed, retailers might decrease their profitability when running promotions by displacing expenditures from high margin to lower margin products. Using household level store receipts and an extended AIDS model, we provide evidence that while household expenditures do increase with promotions, there is also a significant reallocation of expenditures among the different categories. This implies that retailers have to choose carefully which products are promoted, if promotions are to increase profits.
Social Science Research Network, 2013
Retailers determine the assortment for a mix of product categories in a particular space; e.g., t... more Retailers determine the assortment for a mix of product categories in a particular space; e.g., the checkout aisle, end-of-aisle shelves, or freezer space. Within such a “target�? space, shoppers are exposed to a selection of product categories that are not necessarily correlated in consumption (i.e., neither substitutes nor complements). In this paper, we examine whether the assortment of one category affects a consumer’s purchase incidence decision in another independent category that shares a common display space (e.g., frozen meals and ice cream). We use a multivariate probit model of purchase incidence and incorporate assortment variety captured via an entropy measure. Results from analyzing IRI data and an online experiment provide strong evidence that consumers are less likely to purchase from a category of a given assortment when it is presented with another category assortment of greater variety and that this effect is driven by the display proximity. Further, results from an eye-tracking study point to the consumers’ allocation of limited attention to category assortments as an explanation for the finding. This work serves as one of the first studies documenting the impact of product assortment beyond a focal category, and the results highlight a limitation of individual category management when making product assortment decisions in grocery retailing.
SSRN Electronic Journal, 2013
Retailers determine the assortment for a mix of product categories in a particular space; e.g., t... more Retailers determine the assortment for a mix of product categories in a particular space; e.g., the checkout aisle, end-of-aisle shelves, or freezer space. Within such a “target�? space, shoppers are exposed to a selection of product categories that are not necessarily correlated in consumption (i.e., neither substitutes nor complements). In this paper, we examine whether the assortment of one category affects a consumer’s purchase incidence decision in another independent category that shares a common display space (e.g., frozen meals and ice cream). We use a multivariate probit model of purchase incidence and incorporate assortment variety captured via an entropy measure. Results from analyzing IRI data and an online experiment provide strong evidence that consumers are less likely to purchase from a category of a given assortment when it is presented with another category assortment of greater variety and that this effect is driven by the display proximity. Further, results from an eye-tracking study point to the consumers’ allocation of limited attention to category assortments as an explanation for the finding. This work serves as one of the first studies documenting the impact of product assortment beyond a focal category, and the results highlight a limitation of individual category management when making product assortment decisions in grocery retailing.
Quantitative Marketing and Economics, 2004
An important question that has been raised in supermarket retailing is whether weekly promotions ... more An important question that has been raised in supermarket retailing is whether weekly promotions induce households to increase their in-store expenditures or merely reallocate a predetermined spending amount in that week. That is, are households' grocery shopping expenditures preset before entering the store or are flexible and determined while in the store as a function of the specific store offerings encountered during the store visit? This is an important question for the retailer in light of the vast array of temporary promotions offered to consumers. Indeed, should expenditures be fixed before entering the store (for instance, as a function of the household's inventory and/or income), it is possible that retailers might decrease their profitability when running promotions by displacing expenditures from high margin items to lower margin products. We claim that to answer this question meaningfully one must consider the totality of the household's within-store purchases (i.e., the market basket) and not just purchases of the promoted products. Using a rich database that contains the entire basket of goods bought over time by households from a given supermarket chain, we attempt to describe the drivers of both the level of expenditure and its allocation over the different groups of products. We use an extended version of the Almost Ideal Demand System (AIDS) for this purpose and our empirical results provide convincing evidence that while household expenditures do increase with promotions, there is also a significant reallocation of expenditures among the different groups of products. This implies that retailers have to choose carefully which items are promoted and to what depth, if promotions are also to increase profits, not merely store level expenditures.
Economics Letters, 2014
ABSTRACT We show that a seasonal good could be priced countercyclically due to the heterogeneous ... more ABSTRACT We show that a seasonal good could be priced countercyclically due to the heterogeneous seasonal shifts in consumer valuations. We provide empirical support for our explanation based on two product categories (canned soup and tuna) studied in the literature.
Page 1. Structural Demand Models for Retailer Category Pricing Eric Anderson University of Chicag... more Page 1. Structural Demand Models for Retailer Category Pricing Eric Anderson University of Chicago and Naufel Vilcassim London Business School December 21, 2001 Page 2. Structural Demand Models for Retailer Category Pricing Abstract ...
Journal of Marketing Research, 2012
In many service industries, firms introduce three-part tariffs to replace or complement existing ... more In many service industries, firms introduce three-part tariffs to replace or complement existing two-part tariffs. In contrast with two-part tariffs, three-part tariffs offer allowances, or “free” units of the service. Behavioral research suggests that the attributes of a pricing plan may affect behavior beyond their direct cost implications. Evidence suggests that customers value free units above and beyond what might be expected from the change in their budget constraint. Nonlinear pricing research, however, has not considered such an effect. The authors examine a market in which three-part tariffs were introduced for the first time. They analyze tariff choice and usage behavior for customers who switch from two-part to three-part tariffs. The findings show that switchers significantly “overuse” in comparison with their prior two-part tariff usage. That is, they attain a level of consumption that cannot be explained by a shift in the budget constraint. The authors estimate a discr...
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Papers by Naufel Vilcassim