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A Model of Stochastic Variety-Seeking

Author

Listed:
  • Minakshi Trivedi

    (State University of New York at Buffalo)

  • Frank M. Bass

    (University of Texas at Dallas)

  • Ram C. Rao

    (University of Texas at Dallas)

Abstract

In this paper, we propose and test a stochastic model of consumer choice that incorporates attribute-based variety seeking. Our stochastic variety-seeking model (SVS) has nested within it a fixed variety-seeking model, a zero-order model of choice, and a first-order (“pure variety”) model. We compare the SVS model to alternative models. Under stochastic variety seeking, we examine the nature of the variety sought and provide a test of the “satiation” hypothesis. Unlike fixed variety-seeking models, our model allows variety seeking to vary in intensity and consistency over individuals as well as over purchase occasions. We show that the model is equivalent to a random utility model with the features that the attributes of brands relative to those of the brand previously bought influence choice, and the extent of variety seeking is random over choice occasions for a given individual. The model permits a closed-form solution to the conditional switching probabilities parameterized by variety-seeking parameters, and dependent on brand attributes. We apply our model to individual choice data obtained from a field study specifically designed for the purpose at hand.

Suggested Citation

  • Minakshi Trivedi & Frank M. Bass & Ram C. Rao, 1994. "A Model of Stochastic Variety-Seeking," Marketing Science, INFORMS, vol. 13(3), pages 274-297.
    • Handle: RePEc:inm:ormksc:v:13:y:1994:i:3:p:274-297
    DOI: 10.1287/mksc.13.3.274
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    Citations

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    Cited by:

    1. P. B. Seetharaman & Hai Che, 2009. "Price Competition in Markets with Consumer Variety Seeking," Marketing Science, INFORMS, vol. 28(3), pages 516-525, 05-06.
    2. S. Sajeesh & Jagmohan S. Raju, 2010. "Positioning and Pricing in a Variety Seeking Market," Management Science, INFORMS, vol. 56(6), pages 949-961, June.
    3. Meixner, Oliver & Knoll, Viktoria, 2012. "Sustainable Products and Consumers’ Brand Choice," 2012 International European Forum, February 13-17, 2012, Innsbruck-Igls, Austria 144976, International European Forum on System Dynamics and Innovation in Food Networks.
    4. Irani-Kermani, Roozbeh & Jaenicke, Edward C., 2018. "Generalizing Variety Seeking Measurement from Brand Space to Product Attribute Space," 2018 Annual Meeting, August 5-7, Washington, D.C. 273818, Agricultural and Applied Economics Association.
    5. Pradeep K. Chintagunta, 1998. "Inertia and Variety Seeking in a Model of Brand-Purchase Timing," Marketing Science, INFORMS, vol. 17(3), pages 253-270.
    6. Jie Zhang & Lakshman Krishnamurthi, 2004. "Customizing Promotions in Online Stores," Marketing Science, INFORMS, vol. 23(4), pages 561-578, June.
    7. Tom Fangyun Tan & Serguei Netessine & Lorin Hitt, 2017. "Is Tom Cruise Threatened? An Empirical Study of the Impact of Product Variety on Demand Concentration," Information Systems Research, INFORMS, vol. 28(3), pages 643-660, September.
    8. Mora, José-Domingo & González, Eva M., 2016. "Do companions really enhance shopping? Assessing social lift over forms of shopper value in Mexico," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 228-239.
    9. Robert Zeithammer & Raphael Thomadsen, 2013. "Vertical Differentiation with Variety-Seeking Consumers," Management Science, INFORMS, vol. 59(2), pages 390-401, August.
    10. Cermak, Gregory W., 1996. "Budget allocation as a measure of potential demand," Journal of Economic Psychology, Elsevier, vol. 17(5), pages 591-613, November.
    11. P. B. Seetharaman, 2004. "Modeling Multiple Sources of State Dependence in Random Utility Models: A Distributed Lag Approach," Marketing Science, INFORMS, vol. 23(2), pages 263-271, April.
    12. Desai, Kalpesh Kaushik & Trivedi, Minakshi, 2014. "Do consumer perceptions matter in measuring choice variety and variety seeking?," Journal of Business Research, Elsevier, vol. 67(1), pages 2786-2792.

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