The effects of in-store displays and feature advertising on consideration sets

Abstract

A heteroscedastic random utility model which allows for a flexible pattern of cross elasticities at the household level is explored. This flexibility enables the model to describe patterns of price sensitivity among competing brands which correspond to the competitive structure reflected in consideration sets. The effects of displays and features on these price sensitivities and the consideration sets are examined. The model is applied to scanner panel data of tuna purchases, where in-store displays and feature advertisements are found to increase product net utility and decrease price sensitivity for the promoted item.