An Affinity for Variety: Umbrella Brands and Buyer Behavior: An Abstract

Abstract

In this study, we investigate the relationship between levels of variety in buyers’ purchases and the variety offered by umbrella brands. We studied that relationship in a competitive market where there are many product alternatives available to buyers. Humans have a Love/Hate relationship with variety. On the one hand, humans all seek variety to some extent because “variety is the very spice of life that gives it all its flavor” (Cowpers 1785). On the other hand, too much variety can complicate life and cause the stress associated with information/decision overload. Umbrella brands offer a means of relieving some of the tension in this Love/Hate dilemma by providing a variety of products under a common brand name. This variety offers buyers added “spice” without the cognitive tasks and risks of assessing additional brands. In this study, we investigate the relationship between levels of variety in buyers’ purchases and the variety offered by umbrella brands. We studied that relationship in a competitive market where there are many product alternatives available to buyers. The definitions of variety fall into two broad categories. The first category includes definitions that focus on patterns of behavior such as sequences of purchases (processes). The second broad category includes definitions that focus on the variability within a group of purchases (outcomes). Our preliminary analysis employed an outcomes approach. The retail grocery industry is the context for this research. We started with data from one category in one store (approximately 120,000 purchase observations, 10,600 rewards card numbers, 660 brands of wine, 297 umbrella brands). We removed buyers with fewer than three purchases in the category from the data (approximately 4500 buyers and 90,000 transactions). We measured several characteristics of buyers, brands, and brand attributes. Our measures included (a) Category Variety Score, (b) Among Brands Variety Score, (c) Within Brand Variety Score, and (d) Brand Umbrella Width. The preliminary analyses found positive and significant relationships between brand Umbrella Width and brand sales and negatively correlated with buyer’s Category Variety Score. Category Variety Score is also correlated with Within Brand Variety Score. The implications of this research are intended to enhance our knowledge of this relationship and to provide insights that are useful to brand and retail category managers.