How do consumers come up with household inventory estimates? Upon developing a model, we go on to show that estimates of the level of product inventory in a household, rather than the actual inventory levels, dictate purchase patterns and decisions.

Abstract

To understand how consumers’ estimates on household inventory levels are biased, we develop a model of how consumers estimate the quantity of a product they have in inventory. Studies that test this model’s predictions reveal that consumers fix their estimates on their average inventory level and insufficiently adjust for the actual level, adjustments from the average inventory follow an inelastic power function, and adjustments are more elastic and, consequently, more accurate when inventory is salient. These studies include two laboratory experiments for eight products and two field studies for 29 products.

Using this model, we are able to demonstrate that biased inventory estimates increase overstocking and spoilage among stockout-averse consumers, but increase stockouts and unmet demand among overstocking-averse consumers. The studies that are conducted also indicate that estimation biases are related to the extent of impulse buying, the ease of stockpiling, and the average promotional elasticity. These results provide new insights into accelerating the consumption of healthful foods and improving the targeting of sales promotions to consumers.

For more information see Wansink, Brian and Pierre Chandon (2006), “How Biased Household Inventory Estimates Distort Shopping and Storage Decisions,” Journal of Marketing, 70:4 (October), 118 – 135. Reprinted with permission from Journal of Marketing , published by the American Marketing Association http://www.marketingpower.com/content1053.php

Contact:
Brian Wansink, PhD
Food and Brand Lab, Director
110 Warren Hall
Cornell University
Ithaca, NY 14853
Email: foodandbrandlab@cornell.edu

*This study was conducted at the University of Illinois, former location of the Cornell Food and Brand Lab.

Back to Grocery Shopping Psychology.

cardi logo and a e m logo and Cornell University