A model of inertia and variety-seeking with marketing variables

Seetharaman, P. B.; Chintagunta, Pradeep K.

doi:10.1016/s0167-8116(97)00015-3

Cited by 68 publications

(41 citation statements)

References 31 publications

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“…5 This explanation, unlike that of Jeuland (1978), is predictive of not only the consumer's tendency to switch away from the most recently consumed brand, but it is also predictive of the brand the consumer will switch to. This explanation has governed the subsequent development of a number of statistical models of variety seeking (see Lattin and McAlister 1985, Lattin 1987, Feinberg et al 1992, Erdem 1996, Seetharaman and Chintagunta 1998, Che et al 2007.…”

Section: Background Literature On Consumer Variety Seekingmentioning

confidence: 99%

Price Competition in Markets with Consumer Variety Seeking

Seetharaman

Che

2009

Marketing Science

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W e investigate price competition between firms in markets characterized by consumer variety seeking.While previous research has addressed the effect of consumer inertia on prices, there exists no research on the effects of variety seeking on price competition. Our study fills this gap in the literature. Using a twoperiod duopoly framework as in Klemperer's analysis of inertial markets, we show that the noncooperative pricing equilibrium in a market with consumer variety seeking may be the same as the collusive outcome in an otherwise identical market without variety seeking. Specifically, our variety-seeking model implies tacit collusion between firms in both periods, unlike the inertia model of Klemperer that implies tacit collusion between firms only in the second period but implies fierce price competition in the first period. When consumers are assumed to have rational expectations about future prices, the implied first-period prices increase further, which is consistent with what Klemperer finds in an inertial market. To summarize, while our variety-seeking analyses support two key results (pertaining to second-period prices and rational expectations) previously derived for inertial markets by Klemperer, they depart from one key result (pertaining to first-period prices).

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Section: Background Literature On Consumer Variety Seekingmentioning

confidence: 99%

Price Competition in Markets with Consumer Variety Seeking

Seetharaman

Che

2009

Marketing Science

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“…Givon's (1984) model of consumer behaviour assumes that a given consumer is either a variety seeker or a variety-avoider and defines variety avoidance as 'the tendency to choose the brand purchased during the previous purchase occasion simply out of inertia'. Seetharaman and Chintagunta (1998), in their model of inertia and variety seeking with marketing variables use the term inertia to refer to variety-avoidance (p.4). This idea parallels Bozzo's (2002) approach where individual consumers can be involved in an inert buying pattern or who show limited interest towards alternative brands on the market.…”

Section: Figure 2 Attitude/behaviour Matrix For No Loyaltymentioning

confidence: 99%

Why customers stay: reasons and consequences of inertia in financial services

White

Yanamandram

2004

Managing Service Quality: An International Journal

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This research investigates inertia in a financial services context, with particular focus on the reasons for consumers' dissatisfaction and inert behaviour, and studies the customers' complaining behaviours and past and future inertia. The study utilised a two part methodology, including both qualitative and quantitative research. Twenty indepth interviews provided the preliminary data required for developing a questionnaire which was subsequently completed by 410 respondents. Determinants of dissatisfaction included the number and size of account fees, whilst determinants of inertia were the perception of similarity between financial institutions and the complexity, costs and time inherent in switching. Factors differentiating future inertia and future active customers included the type of account, length of time the account had been held, membership of a number of financial institutions, income and level of consideration giving given to changing financial institution. KeywordsInertia, financial services, business-to-consumer Why Customers Stay? Reasons and Consequences of Inertia in Financial Services AbstractThis research investigates inertia in a financial services context, with particular focus on the reasons for consumers' dissatisfaction and inert behaviour, and studies the customers' complaining behaviours and past and future inertia. The study utilised a two part methodology, including both qualitative and quantitative research. Twenty indepth interviews provided the preliminary data required for developing a questionnaire which was subsequently completed by 410 respondents. Determinants of dissatisfaction included the number and size of account fees, whilst determinants of inertia were the perception of similarity between financial institutions and the complexity, costs and time inherent in switching. Factors differentiating future inertia and future active customers included the type of account, length of time the account had been held, membership of a number of financial institutions, income and level of consideration giving given to changing financial institution.

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“…In the marketing literature and, especially in that referring to buyer behaviour, social class has been considered a better variable than income as a predictor of consumer behaviour (e.g., Martineau 1958;Schaninger 1981). Households with higher income levels are usually more loyal to the first-choice store (McGoldrick, Andre 1997;Seetharaman, Chintagunta 1998) and, in our context, we posit that households with higher socioeconomic status may show a smaller variation over time.…”

Section: Demographic Variables Of Householdsmentioning

confidence: 88%

“…Household size may have a positive effect on multiple-store shopping (Seetharaman, Chintagunta 1998). Larger households will be more likely to have different tastes and needs (Seetharaman, Chintagunta 1998) and, so, a higher level of multiple-store shopping will be expected.…”

Section: Demographic Variables Of Householdsmentioning

confidence: 99%

“…Larger households will be more likely to have different tastes and needs (Seetharaman, Chintagunta 1998) and, so, a higher level of multiple-store shopping will be expected. Conversely, Mägi (2003) maintains that larger households may have more time restrictions and a greater tendency to concentrate their purchases at a single store, so the dynamic variation in the store set will be less.…”

Section: Demographic Variables Of Householdsmentioning

confidence: 99%

See 1 more Smart Citation

Towards a Dynamic Analysis of Multiple-Store Shopping: Evidence From Spanish Panel Data

Martínez-Caraballo

Salvador

Berné

et al. 2013

Journal of Business Economics and Management

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Abstract. This paper aims to determine why consumer purchasing of fast moving consumer goods varies over time in Spain. More specifically, our objective is to explain multiple-store shopping in the households belonging to the Spanish Nielsen Homescan consumer panel that provides information about household shopping decisions between April 2003 and April 2004. In order to achieve this purpose, a Bayesian Dynamic Tobit model is used. The results allow us to confirm the influence of several demographical and geographical variables on household multiple-store shopping during the sample period.

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A model of inertia and variety-seeking with marketing variables

Cited by 68 publications

References 31 publications

Price Competition in Markets with Consumer Variety Seeking

Price Competition in Markets with Consumer Variety Seeking

Why customers stay: reasons and consequences of inertia in financial services

Towards a Dynamic Analysis of Multiple-Store Shopping: Evidence From Spanish Panel Data

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