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Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation

Publication ,  Journal Article
Amaldoss, W; Jain, S
Published in: Management Science
April 1, 2010

Some luxury goods manufacturers offer limited editions of their products, whereas some others market multiple product lines. Researchers have found that reference groups shape consumer evaluations of these product categories. Yet little empirical research has examined how reference groups affect the product line decisions of firms. Indeed, in a field setting it is quite a challenge to isolate reference group effects from contextual effects and correlated effects. In this paper, we propose a parsimonious model that allows us to study how reference groups influence firm behavior and that lends itself to experimental analysis. With the aid of the model we investigate the behavior of consumers in a laboratory setting where we can focus on the reference group effects after controlling for the contextual and correlated effects. The experimental results show that in the presence of strong reference group effects, limited editions and multiple products can help improve firms' profits. Furthermore, the trends in the purchase decisions of our participants point to the possibility that they are capable of introspecting close to two steps of thinking at the outset of the game and then learning through reinforcement mechanisms. © 2010 INFORMS.

Duke Scholars

Published In

Management Science

DOI

EISSN

1526-5501

ISSN

0025-1909

Publication Date

April 1, 2010

Volume

56

Issue

4

Start / End Page

621 / 644

Related Subject Headings

  • Operations Research
  • 15 Commerce, Management, Tourism and Services
  • 08 Information and Computing Sciences
 

Citation

APA
Chicago
ICMJE
MLA
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Amaldoss, W., & Jain, S. (2010). Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation. Management Science, 56(4), 621–644. https://doi.org/10.1287/mnsc.1090.1133
Amaldoss, W., and S. Jain. “Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation.” Management Science 56, no. 4 (April 1, 2010): 621–44. https://doi.org/10.1287/mnsc.1090.1133.
Amaldoss, W., and S. Jain. “Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation.” Management Science, vol. 56, no. 4, Apr. 2010, pp. 621–44. Scopus, doi:10.1287/mnsc.1090.1133.

Published In

Management Science

DOI

EISSN

1526-5501

ISSN

0025-1909

Publication Date

April 1, 2010

Volume

56

Issue

4

Start / End Page

621 / 644

Related Subject Headings

  • Operations Research
  • 15 Commerce, Management, Tourism and Services
  • 08 Information and Computing Sciences