Modelling joint product assortment and pricing decisions:Abstract This paper investigates empirically the product assortment strategies

of oligopolistic firms. We develop a framework that integrates product choice...

Michaela Draganska, Michael Mazzeo and Katja Seim

Quantitative Marketing and Economics, 2009, Volume 7, Number 2, Pages 105-146

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Abstract
This paper investigates empirically the product assortment strategies of oligopolistic firms. We develop a framework that integrates product choice and price competition in a differentiated product market. The present model significantly improves upon the reduced-form profit functions typically used in the entry and location choice literature, because the variable profits that enter the product-choice decision are derived from a structural model of demand and price competition. Given the heterogeneity in consumers product valuations and responses to price changes, this is a critical element in the analysis of product assortment decisions. Relative to the literature on structural demand models, our results show that incorporating endogenous product choice is essential for policy simulations and may entail very different conclusions from settings where product assortment choices are held fixed.

Retail assortment: more is not equal to better

Product assortment strategy is a central yet complex issue for retailers. Retail product assortments...
Susan M. Broniarczyk and Wayne D. Hoyer

2010, Retailing in the 21st Century, Part 3, Pages 271-284

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Abstract
Product assortment strategy is a central yet complex issue for retailers. Retail product assortments have undergone drastic changes in the past decade from unparalleled large assortments in the early 1990s to the current emphasis on streamlined, efficient assortments. The purpose of this chapter is to provide guidance to retailers making these important assortment strategy decisions. Consumer assortment perceptions have been shown to be one of the top three criteria, along with location and price, in determining retail patronage. In the 1980s and early 1990s, retailers assumed that larger product assortments better met consumer needs. Broad assortments should increase the probability that consumers will find their ideal product and offer flexibility for variety seekers. Thus, in an effort to serve the customer, the number of products offered in supermarkets escalated from 6000 stock keeping units (SKUs) in the 1980s to over 30,000 SKUs in the early 1990s. However, the Food Marketing Institute issued two imperative reports that called this increasing assortment into question. First, these broad assortments resulted in higher inventory costs and more out-of-stocks for retailers (see Verhoef & Sloot chapter in this book for further information on out-ofstocks).

Second, these higher costs made it difficult for conventional supermarkets to compete against the growing retail formats of discount stores, warehouse clubs, and supercenters

Category management, product assortment and consumer welfare

Abstract In this article, we endogenize product assortment decisions under a category management (CM) framework in a channel setup. We...
Shailendra Gajanan, Suman Basuroy and Srinath Beldona

Marketing Letters, 2007, Volume 18, Number 3, Pages 135-148

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Abstract
In this article, we endogenize product assortment decisions under a category management (CM) framework in a channel setup. We find that (1) product assortment is polarized more under CM than under a non-CM regime; (2) the price of a high-end (low-end) product in an assortment increases (decreases) under CM than under a non-CM regime; and (3) a high-quality manufacturer makes more profit than a low-quality manufacturer. In our model, the manufacturers choice of quality and its polarization is driven by the existence and the decisions of the retailer (CM or non-CM). Finally, we have an interesting result on consumer welfare. We find that the total consumer welfare, as measured by consumer surplus, worsens under CM only when there is sufficient heterogeneity in consumers tastes.

Effect of assortment change on consumer choice and its impact on competition

han months. More importantly, they are using these capabilities to change the assortment (i.e., introduce new products) more frequently, which many practitioners claim increases...
Felipe Caro and Victor Martnez-de-Albeniz

International Series in Operations Research & Management Science, 1, Volume 131, Consumer-Driven Demand and Operations Management Models, Part 1, Pages 63-79

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Abstract
The recent success of fast fashion retailers has changed the (affordable) fashion industry dramatically. These companies, such as Zara, are characterized by a flexible supply chain that has allowed them to reduce design and production lead times to just a few weeks, rather than months. More importantly, they are using these capabilities to change the assortment (i.e., introduce new products) more frequently, which many practitioners claim increases sales, since there is evidence showing that customers visit more often the stores with fresher products. We propose in this chapter a customer consumption model with satiation and multiple competing retailers. The model implies that the consumers will spend a higher share of their budget in retailers that renovate the assortment at a faster pace. Using the insights from the model, we determine how often retailers should change the assortment in the competitive equilibrium.