Consumer Responses to ``Favorite'' Product Removal: Evidence from Beverage Vending Machines

How do consumers react when their favorite product is removed? This paper sheds light on this question by analyzing purchase behavior at vending machines in Tokyo train stations, where the majority of machines underwent product changes during our sample period. Using a synthetic difference-in-differences approach, we find evidence of consumers substituting both within and across vending machines. Notably, consumer demand expands at their non-favorite machines, driven not only by purchases of their favorite product but also of other products. Most interestingly, we document increased consumer experimentation: after removal of their favorite product, consumers become more frequently try new products and switch choices, consistent with learning behavior. This implies that persistent choice of a “favorite” product may partly reflect habit, and its removal can disrupt one’s routines, and prompting exploration. We also show heterogeneous treatment effect by variety-seeking tendency: High variety-seekers are more likely to choose a substitute at their favorite vending machine, whereas low variety-seekers tend to search for their favorite product elsewhere. However, experimentation and learning behaviors are invariant to variety-seeking tendency.