Building Market Structures from Consumer Preferences

Abstract

The authors present a model that maps competitive market structures by identifying the preference structure of each consumer segment. By marrying two different data types—switching probabilities and attribute ratings—their model divides a market into several homogeneous sub-markets in which consumers consider a distinctive subset of brands (consideration set or competitive group) with a segment-specific rule for attribute evaluations and a segment-specific ideal point. Using data published in Harshman and colleagues’ (1982) work, the authors examine the U. S. car market and find brand-loyal segments for all car types except those favored by first-time buyers, a universal market, and five switching segments that consider car groups differing in the nation of origin, size, and luxury level. Breaking the switching segment into finer partitions gives a better account of the data than the Colombo-Morrison model or an asymmetric generalization of that model. The authors advocate the development of marketing goals with respect to each of the segment maps in the hope that it will lead to more synergistic marketing strategies for brands encountering multifaceted competition.

The Multifaceted Nature of Exploration and Exploitation: Value of Supply, Demand, and Spatial Search for Innovation

“…In the marketing literature, for instance, there is a long tradition of demand-side or customer-centered search (Day 1994, Kohli and Jaworski 1990, Levitt 1960). Such search is often motivated by the potential discovery of innovation opportunities through, for example, brand extension, product repositioning, and the targeting of new customer groups based on an improved understanding of the customer need being served, market preferences, and product use and substitution patterns (Cooper andInoue 1996, Day et al 1979). For example, Bevan's (1974) study of the UK potato crisp industry neatly illustrates how Golden Wonder, a regional crisp producer, was able to challenge Smith's dominant position as national market leader in the 1960s through demand-side search.…”

Reference quality-based competitive market structure for innovation driven markets

“…Following Kamakura and Russell (1989), other scholars including Cooper and Inoue (1996), Heerde, Mela, and Manchanda (2004), and Rutz and Sonnier (2011), have used the concept to analyze various marketing issues while considering the competitive market structure. However, these approaches do not provide a complete picture of the 4 From the supply-side perspective, the economic literature contains an extensive and comprehensive discussion of industrial organization, while the demand-side market structure is predominantly covered by the marketing literature (Elrod et al 2002).…”

Provision of fitting-out as a response to the presence of heterogeneous homebuyers: An empirical study

“…It has been well established, at least in areas other than housing, that consumers often have heterogeneous preferences. Indeed, one major objective in Competitive Market-Structure analysis is the representation of heterogeneity of consumer preferences (Cooper & Inoue, 1996). Nonetheless, few studies on housing preferences have addressed the problem of heterogeneous consumer preferences, although there are some exceptions, e.g.…”