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 studying consumer purchase behavior at vending machines located at Tokyo train stations, where most vending machines experienced some product changes during our sample period.By applying synthetic difference-in-differences, we find evidence of consumers conducting both within- and between-vending machine substitutions. In particular, we observe an expansion of demand in their non-favorite machines, where the increase comes from not only their favorite product, but also other products. Most interestingly, we find evidence that consumers buy more products that are new to them and switch more often; such behavior is consistent with experimentation and learning. This suggests that, to some extent, consumers' persistent choice of the same product may be an outcome of habitual behavior, and the removal of their ``favorite'' product may break their habit and trigger them to experiment with new products. We also find that high variety-seeking consumers are more likely to choose a substitute at their favorite vending machine, whereas low variety-seeking consumers tend to seek their favorite product at another vending machine. However, consumers' experimentation and learning behavior does not vary with variety-seeking tendency.