Market Share Response When Consumers Seek Variety

Abstract

Using a model of consumer variety-seeking, the authors study the long-term market share implications of changes in variety-seeking intensity, brand preferences, and pairwise similarities between brands. Those analytically derived guidelines are examined in three-brand and five-brand markets through simulation. The least preferred brand is found generally to gain market share as variety-seeking intensifies whereas the most preferred brand tends to lose share. If two brands are perceived as having become more similar without a change in overall preferences, the repositioned brands are likely to lose market share while uninvolved brands gain share. If two brands are perceived as having become more similar in a way that increases overall preference for those repositioned brands, they should gain market share while uninvolved brands lose it. A behavioral experiment provides preliminary empirical support for some of the findings.