Assessing the Utility of Retailer Based on Generalized Costs of End-Consumers

Abstract

<jats:title>Abstract</jats:title><jats:p>This paper gives a methodology to estimate the generalized costs of end-consumers visiting any retailer. The attractiveness and utility of retailers for end-consumers have been calculated based on their possible generalized costs according to their choice. According to the developed model, analysis of the consumer market visiting all shops in the described zone has been made. Research provides explanation of generalized costs of end-consumers. Generally, the utility function of end-consumers visiting retailers depends on the price and non-price factors. The regression models describing the time spent on transit to a retailer and inside of it provide monetary assessment of costs associated with the purchase process. The monetary level of fatigue was evaluated using the calories spent during the purchase process. The attractiveness of the retailer in an urban zone was assessed as an inverse function of the generalized costs.</jats:p>

Patterns of the Distribution of the Demand of End-Consumers among Retailers in the Zone of their Residence

“…The process of consuming goods is closely linked to the concept of process of consumption. The cost of actions in the process of consumption of goods was estimated using the formula presented in Halkin (2020). Traditional shopping deals with physical movement to store and back and trade service inside of it.…”

“…2) Conducting an experiment and processing the data. This stage is aimed at collecting information on demand probability for stores in this area according to the method presented in Halkin (2020). Online shopping will be included in the calculation as well.…”

“…In order to estimate the boundaries, an algorithm is used, which consists of five stages (Halkin, 2020).…”

“…Retailers D and G will have the highest probability of visiting and retailer B the lowest due to high generalized costs for them -without the Internet delivery channel (according to Halkin, 2020). With the addition of the Internet, retailers D and G remain the most attractive and the least attractive option is L -e-commerce.…”

“…Certain parameters of existing models and methods do not provide a systematic approach to determining retailer visiting probability vs e-commerce in current market or trade zone. Previously the utility of retailer based on generalized costs of end-consumers was assessed (Halkin, 2020) only for walking traditional shopping in store. Here, the e-commerce option will be added to the research area.…”