Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56677
Authors: 
Diels, Jana Luisa
Wiebach, Nicole
Year of Publication: 
2011
Series/Report no.: 
SFB 649 discussion paper 2011-021
Abstract: 
Out-of-Stock (OOS) is a prevalent problem customers face at the POS. In this paper, we demonstrate both theoretically and empirically how OOS-induced substitution patterns can be explained and predicted by means of context and phantom theory. We further analyze the relevance of promotions, for which OOS is most pronounced, as essential driver of differences in customers' OOS reactions. The results of an online experiment demonstrate that customers substitute unavailable items in accordance to a negative similarity effect which is reduced, however, for OOS items on promotion. The empirical findings further suggest that customers' OOS responses differ for promoted vs. non-promoted items. We find that customers being affected by a stock-out of promotional products significantly more often postpone purchases and tend to avoid substitution resulting in severe losses for the retailer. However, for non-promoted items, customers easily switch to alternative brands. That way, manufacturers lose profit and possibly loyal customers.
Subjects: 
out-of-stock
context effects
phantoms
promotion
consumer decision making
JEL: 
M31
C12
C13
C81
Document Type: 
Working Paper

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