Product set granularity and consumer response to recommendations

Abstract

Many consumer decisions are assisted by product recommendations. When retailers provide such recommendations, there is an inherent tension between (1) presenting a set of products that are close in attractiveness (fine product set granularity) and (2) presenting a wider range of products that are more different in attractiveness (coarse product set granularity). While the former can maximize the attractiveness of the recommended set of products, the latter makes it easier for consumers to determine which of the recommended products is most attractive, thus boosting consumer response. Evidence from a large-scale field study (with naturally occurring variation in the granularity of online recommendation sets) provides strong support for this tension and shows that less fine-grained product recommendation sets promote consumer response. We also find that, in line with our theorizing, coarser set granularity increases the time consumers spend processing detailed information about individual products relative to time they spend comparing products at the set level. These effects are less pronounced when consumer engagement in the decision process is low. The key insights from the field study are replicated in a tightly controlled experiment (using a different product domain). The findings of this research have important implications for how best to integrate large online assortments and product recommendations to stimulate consumer response.

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