Optimal assortment decisions for a speciality retailer facing a mass merchandizing competition

Fecha de Publicación: 22 junio, 2009
Industria: Otras
Autores:

Traditional marketing and economic literature including search costs in purchase behavior analyze the case of symmetric equilibrium where all retailers fix the same price. This type of equilibrium outcome does not provide useful insights for the case where some intrinsic competitive advantage of some players allow them to offer lower prices. This article explore consumer search processes describing alternative modeling approaches. Then, we propose an asymmetric equilibrium model in a duopoly to explain how specialty retailer could use a higher assortment flexibility to defend from this type of mass merchandiser competition. Finally we compare equilibrium outcomes in several scenarios and propose some extensions to the model.