An Empirical Analysis of the Extreme Cherry Picking Behavior of Consumers in the Frequently Purchased Goods Market

Extreme cherry pickers are customers who seek price deals and excessively avail themselves of deep discount offers which generates negative profits for retailers This study uses market transaction and primary consumer survey data to provide insights into the determinants prevalence and profit impacts of such behavior in the frequently purchased goods market We find that the extreme cherry picking segment is small (about 2% of all shoppers) but its relative value vanes across stores and consumers manifest this behavior only in secondary stores An inverse U shaped relationship marks consumers opportunity costs for cross-store price search and likelihood of extreme cherry picking behavior Finally we also find that a loss leader promotional strategy adds to retailers bottom lines despite the pure loss generated by extreme cherry pickers (C) 2010 New York University Published by Elsevier Inc All rights reserved