Understanding the short-term impact of product discontinuations on consumer response behaviour Denisa Hebblethwaite Faculty of Business and Law 2013 A thesis submitted to Auckland University of Technology in fulfillment of the requirements for the degree of Master of Philosophy (Marketing) Table of Contents List of Figures ................................................................................................................. IV List of Tables.................................................................................................................... V Attestation of authorship ............................................................................................... VII Acknowledgements ...................................................................................................... VIII Abstract ........................................................................................................................... IX Chapter 1: Introduction ................................................................................................. 1 1.1 Research motivation ........................................................................................... 1 1.2 Research problem ............................................................................................... 4 1.3 Contributions of the thesis .................................................................................. 5 1.3.1 Academic contributions .............................................................................. 5 1.3.2 Managerial contributions ............................................................................ 6 1.4 Structure of the thesis ......................................................................................... 6 1.5 Chapter summary ............................................................................................... 7 Chapter 2: Literature review ......................................................................................... 8 2.1 Introduction and overview .................................................................................. 8 2.2 Consumer response to temporary product unavailability ................................. 10 2.2.1 Behavioural consumer responses to an out-of-stock ................................. 10 2.3 Product assortment perceptions and choice decisions ...................................... 21 2.3.1 Product assortment .................................................................................... 21 2.3.2 Product assortment perceptions, moderating factors and context theory .. 21 2.4 Consumer response to permanent product unavailability ................................ 24 2.4.1 Permanent assortment reductions .............................................................. 24 2.4.2 Product/brand delisting ............................................................................. 28 2.5 Chapter summary ............................................................................................. 29 Chapter 3: Development of the propositions .............................................................. 31 3.1 Chapter overview ............................................................................................. 31 3.2 Research objectives and propositions ............................................................... 32 I 3.2.1 Research objectives ................................................................................... 32 3.2.2 Propositions ............................................................................................... 33 3.3 Chapter summary ............................................................................................. 37 Chapter 4: Research methodology .............................................................................. 38 4.1 Chapter overview ............................................................................................. 38 4.2 Research problem ............................................................................................. 38 4.2.1 Research objectives ................................................................................... 38 4.2.2 Research questions .................................................................................... 39 4.3 Research design ................................................................................................ 40 4.3.1 The natural experiment ............................................................................. 40 4.3.2 Independent variables................................................................................ 42 4.3.3 Dependent variables .................................................................................. 43 4.3.4 Moderators of the switching behaviour – Purchase profiles ..................... 45 4.3.5 Control groups ........................................................................................... 45 4.4 The Data ........................................................................................................... 46 4.4.1 Overview of the data ................................................................................. 46 4.4.2 Data Preparation for analysis .................................................................... 50 4.4.3 Summary of data for the final studies ....................................................... 57 4.5 Data analysis ..................................................................................................... 57 4.5.1 Descriptive statistics.................................................................................. 57 4.5.2 Statistical tests to compare the means of the dependent variables ............ 59 4.5.3 Propositions for each study ....................................................................... 61 4.6 Chapter summary ............................................................................................. 63 Chapter 5: Results ....................................................................................................... 65 5.1 Introduction ...................................................................................................... 65 5.2 The three studies ............................................................................................... 65 5.2.1 The Anlene milk study .............................................................................. 65 5.2.2 The Kellogg’s Cocoa Crispix cereal study................................................ 72 II 5.2.3 The Bluebird CC’s snack study ................................................................ 81 5.3 Chapter summary ............................................................................................. 90 Chapter 6: Discussion ................................................................................................. 92 6.1 Chapter overview ............................................................................................. 92 6.2 Discussion and interpretation of results ........................................................... 92 6.2.1 Dominant switching response ................................................................... 92 6.2.2 Impact on sales .......................................................................................... 93 6.2.3 Switch to products with similar attributes to the discontinued product .... 96 6.2.4 Moderators of the switching behaviour .................................................... 97 6.2.5 An examination of the results from the three studies ................................ 98 6.2.6 Managerial implications ............................................................................ 99 6.2.7 Academic implications ............................................................................ 101 6.3 Limitations of the research ............................................................................. 102 6.4 Future research directions .............................................................................. 103 References ..................................................................................................................... 104 Appendices .................................................................................................................... 107 Appendix 1: List of defined product categories and switching categories ................... 108 Appendix 2: Average sales ($) for the total, heavy, moderate and light purchasers.... 134 III List of Figures Figure 1-1 Structure of the thesis ...................................................................................... 6 Figure 2-1 Chapter outline .............................................................................................. 10 Figure 2-2 Diagram of consumer response options to an out-of-stock ........................... 11 Figure 5-1 Average monthly spend by light, moderate and heavy purchasers in S1 ...... 70 Figure 5-2 Average monthly spend by light, moderate and heavy purchasers in S1 ...... 78 Figure 5-3 Average monthly spend by light, moderate and heavy purchasers in S1 ...... 87 IV List of Tables Table 2-1: Consumer responses (Substitution, Switch stores or Postpone) to an out-of- stock (%) ......................................................................................................................... 13 Table 4-1: Variables for each study ................................................................................ 47 Table 4-2: Number of shoppers in each study ...............................................................