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Hierarchical Choice Models And Properties Of Optimal And Competitive Assortments

Download Now Date Added: Feb 2010
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This paper studies centralized and decentralized assortment planning problems for a product category with heterogenous product types from two brands. The author model consumer choices in such a product category by two hierarchical choice models: a brand-primary choice model in which consumers choose a brand first, then a product type in the chosen brand, and a type-primary choice model in which consumers choose a product type first, then a brand within that product type. They find that the optimal assortments under centralized management and the competitive assortments under decentralized management have similar properties within the same consumer choice model, but have quite distinctive properties across different consumer choice models.