This study explores the Latin American retail landscape to identify key pillars upon which innovative business models rely. In a region where retail innovation has traditionally been targeted at high-income consumers, we find a new breed of retailers that cater to the large mass of emerging consumers. Using qualitative research methods, we delve into the minds of Latin American emerging consumers to uncover their needs and paradigms. We also pinpoint the avenues of innovation retailers have followed to serve this impoverished segment. We find that retailers’ efforts to innovate have resulted in at least three original retail formats: one centered on providing access to durable goods, another centered on offering a wide assortment of goods and a convenient location, and the last one centered on incorporating design and quality. Based on the wheel of retailing theory, we show how these new formats are changing the structure of the retail industry in the region.

En los últimos años, la necesidad de atraer a los consumidores emergentes se ha vuelto el foco primordial para los principales minoristas latinoamericanos. Hasta ahora, atraerlos ha sido difícil debido a la insistencia en adaptar las fórmulas del retail que han funcionado en Europa y EE.UU., pero que tienen poco que ofrecer a consumidores con ingresos más modestos. Sin embargo, una investigación conjunta de The Coca-Cola Retailing Research Council–Latin America y la consultora Booz Allen Hamilton en 2006, –que combinó focus groups en Argentina, Brasil, Chile, Colombia y México con más de 200 entrevistas a consumidores en terreno y con un panel de expertos multidisciplinario– reveló que los grupos minoristas verdaderamente innovadores están logrando satisfacer a los consumidores emergentes de manera sostenida y rentable. Para ello, debieron derrotar cinco paradigmas muy arraigados en las mentes de los consumidores emergentes, que los alejaban de los productos que deseaban (por ser inalcanzables) y de los lugares que los vendían (por sentirlos inaccesibles y a veces hasta hostiles). Los minoristas exitosos latinoamericanos crearon una serie de nuevas posibilidades que pueden agruparse en tres plataformas de innovación dirigidas exclusivamente a satisfacer sus aspiraciones: brindar acceso a la compra de productos o servicios, con fórmulas de crédito más flexibles; ofrecer diseño, calidad y surtido a precios asequibles, rompiendo con el paradigma de que las tiendas bellas y bien decoradas deben ser caras; y proporcionar gran variedad y ubicación conveniente, acercando a estos consumidores los productos que necesitan. Empresas como Casas Bahia, Elektra, Casa&Ideas y Locatel, entre otras, ilustran cómo, con creatividad y flexibilidad, se puede satisfacer a este sector largamente incomprendido por las prácticas tradicionales del retail provenientes de otros entornos. Por lo mismo, lo que han hecho estas empresas merece exportarse a otras latitudes, sostienen los autores.

In 2002, Petrobras joined the Argentine fuel retail (gas stations) market. The venture faced several challenges. On the one hand, Argentina was undergoing one of the most severe economic and social crises in history. On the other, the local fuel market was dominated by a few players with brands that held significant consumer mindshare over many years. Additionally, personnel morale at Eg3 –the company acquired by Petrobras to enter the local market- was besieged by uncertainty and disillusionment as a result of a string of mergers and acquisitions and underlying H.R. management remoteness. Finally, the company’s Brazilian origin could jeopardize its appeal for Argentine consumers, given the cultural –and sports-based (soccer)- rivalry between these neighboring countries. The case presents this scenario and calls for decisions associated with service brand definition and strategy formulation for this company across its national borders.

Our two-stage framework predicts that during impression formation, individuals who hold ambivalent attitudes toward an issue are influenced by other sources regardless of their perceived reliability on the target issue. Less ambivalent individuals are presumed likely to check the reliability of the message’s source before accepting it. Experiment 1 finds that highly ambivalent participants do not differentiate between a more vs. less reliable source when forming impressions of a political candidate whereas less ambivalent participants do. Experiments 2 and 3 show that less ambivalent individuals’ attitudes can be influenced by less reliable sources if participants are unaware of this influence or if participants’ cognitive resources are curtailed.

Only two out of the five levers –prices and assortment-, are consistently and broadly relevant accounting for nearly 75% of the price perception. Consumers’ diversity was apparent and so their attitudes towards promotions. We identified five major segments with different price attitudes and reactions to promotions, that were present in all the five cities covered, though their proportion varied. Consumers considered a limited set of SKU’s to form this price perception, and promotions had a minor role, except for those segments more interested in them. Promotions may cloud price perception accuracy among consumers, and drive the existence of bigger “bargain hunting” segments. Value of paper How OSPI is built is a relevant issue for retailers. Promotions are frequently used to build traffic, but its role in the OSPI is not so clear. They may strengthen the bonds with customers, but may also have a negative impact. Retailers may benefit from these insights when defining their promotional strategies, especially when considering EDLP strategies. As the study is based on five capital cities in Latin America, its results may also be of interest to retailers working in other emerging regions.

Findings Rather than emphasizing their limited income, emerging consumers as a group represent a sizable market for consumer products. But they should not be addressed as a single group: peculiarities among them underline the need for further segmentation, as in higher –income segments. Their needs should be better defined as basic instead of just simple, and they don’t just go for the lowest prices or second brands, as they have marked preferences that characterize them. This also reflects in their shopping habits, which partly explains the resilience of the traditional/small format retailers. Our findings underline these segments relevance for consumer products, their rational behaviour as they try to reconcile their preferences with their economic reality, and how this explains their distinct set of products and format requirements. Practical Implications Marketers and retailers interested in catering to lower-income segments will find clues to understanding the preferences, habits and needs of these segments that represent a significant portion of emerging markets. Originality / Value of the paper Conclusions are presented here in the form of 6 common myths on emerging consumers that are contradicted by our findings. The relevance of this study comes not only from the significant size of this market but also from the possibility of marketers to emphasize the social contribution of business.

Findings In spite of being “poor,” emerging consumers have a substantial purchasing power as a group. They work with a very specific set of products, categories and store format needs that distinguish them from other consumers. These distinct needs imply that it is not “just a matter of money and time” for them to change their purchasing patterns over to the “modern trade”. In fact, the evidence shows that smaller scale retailers fit the needs of emerging consumers quite well. Despite perceptions that the small retail sector draws its resilience from informality, we conclude that that the sector can be surprisingly efficient. Furthermore, they retailers exhibit a sustainable business model. Value of paper Although a wide variety of studies have been developed around small-scale retailers, less effort has been devoted to learn about local storekeepers that are actually conducting successful business, especially in reference to less developed countries.

Economic systems are undergoing a generalized effort to improve corporate governance structures and processes. Waves of scandals and increasing public scrutiny push institutional regulators and corporate boards of directors to establish and adopt new practices. Codes of good governance have emerged as a primary tool to increase the effectiveness of corporate governance systems. Building on extant views of institutional change, the authors study the process of the institutionalization of codes of governance and the role of the different actors involved in issuing the codes. They define four groups of actors: law-makers, model makers, market makers, and governance enactors. They analyze a sample of 150 codes of governance introduced in 78 countries from 1978 to 2004 to describe the following stages of institutionalization: precipitating jolts, theorization, diffusion, and reinstitutionalization. This description invites thorough investigation of the content of codes of governance and the likelihood adopting such codes in a given country.

Los tradicionales tres estratos socioeconómicos ya no sirven para explicar las decisiones de compra de los consumidores. Los perfiles del comprador latinoamericano son cinco, y derriban varios mitos acerca de cómo construyen su percepción de precios. Las empresas que adapten sus estrategias podrán fortalecer sus propuestas y llegar a esos bolsillos.

La creciente complejidad del comercio minorista hace que gestionarlo efectivamente sea un desafío cada vez más difícil. Este libro busca facilitar la ardua tarea que cada día enfrentan los directivos del retail. A partir de las presiones que soportan los minoristas presenta un esquema de formulación de la estrategia que avanza hasta la efectiva ejecución. Detall es Detalle. Es necesario no quedarse solo en el plano estratégico sino avanzar a la ejecución del día a día, tienda por tienda y producto por producto. Las Ocho Claves del Retail -el Triángulo y el Pentágono-, identifican los aspectos fundamentales de la estrategia minorista. El modelo de Gestión Estratégica de los Recursos Minoristas permite vigilar detalladamente la marcha del negocio para lograr la difícil rentabilidad de este negocio. Todo esto tratado sin perder de vista las características particulares del entorno minorista de los países emergentes. Cómo los pequeños minoristas también crean valor para satisfacer a los consumidores emergentes, y cómo los fabricantes adaptan sus políticas y prácticas para crear valor en el complejo universo minorista. El sector minorista ha evolucionado hasta tener desafíos estratégicos significativos y particulares del sector. Esta complejidad merece un análisis profundo y detallado. Esta obra representa la búsqueda seria y fundamentada sobre el diseño de la estrategia, las herramientas para su implementación efectiva, la medición financiera y de la productividad específicamente en el negocio retail, y el marco de las relaciones con los fabricantes.

Administracion de Servicios es un significativa revisión y reestructuración del muy recocido libro Services Marketing de Christopher Lovelock. Esta obra representa el primer intento serio y fundamentado para crear un libro en español en que se analizan las estrechas interrelaciones que existen entre los procesos de marketing, operaciones, y recursos humanos en las empresas de servicio. El libro contiene herramientas, conceptos, y estrategias que enfatizan el reto de adminstrar negocios de servicio en el ambiente competitivo de hoy. Hay numerosos ejemplos de diferentes empresas de servicio, especialmente de America Latina y España. Contiene también importantos resultultados de investigación, ochos casos de estudio (seís de los cuales son de empresas en paises de hablo español) y ocho lecturas de autores lider en su campo de estudio. Este libro es adecuado para estudiantes de carreras profesionales como para alumnos de posgrado y participantes de programas ejecutivos. Los instructores que lo utilicen puedan hacer uso selectivo de capítulos, lecturas, y casos para impartir cursos de diferente formato y duracion, y sea en Administración de Servicios, Marketing de Servicios, o Operaciones de Servicio.

 This chapter focuses on low-income consumers in Latin America, and on the retailers that serve their needs. We first highlight some macroeconomic data on the region, describe the research method followed, and then cover our major findings about low –income consumers( such as brand preference, frequency of purchase, ticket size, store selection criteria, their buying decision process, and so on). We then look at the retailers that serve these consumers’ needs and try to understand their business model and value proposition. Finally, we analyze both the performance and the fiscal behavior of smaller retailers.

El caso trata sobre los desafíos para desarrollar un plan comercial de un desarrollo inmobiliario lindero a otro existente. Definición de producto, cliente objetivo y acciones comerciales para el lanzamiento del nuevo desarrollo.

En marzo de 2000 los Ayllon, los dueños de Quinta Fresca, una empresa de venta de Frutas y Verdura a domicilio en el Gran Buenos Aires, se preguntaban cuál era el camino que deberían tomar para continuar con su crecimiento. Sus clientes estaban aumentando y la fidelidad era alta, pero necesitaban consolidar el negocio en muchos aspectos para que dicho crecimiento fuera sostenible en el largo plazo. Aún cuando un crecimiento pronunciado se veía como algo inevitable, Quinta Fresca no contaba con muchas posibilidades de financiamiento. El auge de las empresas de Internet brindaba una nueva oportunidad de conseguir financiación, pero también significaba para la empresa tomar una posición más agresiva e internacionlizarse rápidamente. El caso discute las alternativas de crecimiento que tiene la empresa.

Upon becoming general manager of Artesanías de Colombia (AC), Paola Andrea Muñoz Jurado faced the challenge of redefining the company strategy. AC was a mixed ownership company aimed at fostering, promoting and marketing Colombian handicraft, thus creating attractive job and economic development opportunities for artisans, a low-income sector mostly of indigenous origin. Soon after assuming as general manager, Paola engaged herself in reviewing the company´s previous management in order to plan her next steps. In doing this, it was key to assess the true impact on society of the activities carried out during the previous 16 years under her predecessor, Cecilia Duque’s leadership. The present case allows students to work on a no-for-profit organization strategy, with a strong social orientation, and evaluate value creation within a complex network of relationships with a strong economic, social and cultural impact.

In June 2001, Empresa Editora El Comercio (EEEC) had launched a new popular newspaper, Trome, for low-income families. Although several studies had preceded this launch, sales in following months failed to reach expected levels and actually displayed a decreasing trend. Trome embodied the company’s effort to expand its news coverage to new population segments that were not served by its other newspaper, El Comercio –a traditional daily leading unaided recall and frequent readership rankings among high-income sectors. Six months after Trome’s launch and faced with dropping sales, company managers had met to discuss their options. This case describes management team members’ dilemmas at that meeting: “Should the new paper’s style and contents be changed? Should Trome focus more on sex and violence-related issues, as its competitors did? Would it be convenient to replace the silverware promotion chosen to support launching? Was the conflict with newspaper salesmen’s union adequately managed? Were intended readers’ needs truly and fully understood? Should the company re-launch Trome or would it be wiser to just give up on this project?

In August 2002, Aguas Danone de Argentina (ADA) faced an adverse scenario. Argentina was undergoing its worst economic crisis in history, and bottled water sales were dwindling (replaced by utility network running water). The company needed to boost its revenues through new, innovating, more value-added product development. Argentina displayed a significant interest in fitness. By means of several market research studies, ADA managed to identify a segment whose needs were unmet by existing products and brands. New product launches were planned to target that segment. This case describes the dilemmas faced by ADA and the decisions required to formulate and pursue a strategy for new product launching and brand expansion in adverse scenarios. More specifically, this case provides an opportunity to discuss how a new product category can be created to address market downturns.

Interlocking directorates is a widely studied, applied measure of governance practice. Most of the research has been limited to data from developed countries and studies interlocking as an independent variable explaining other governance constructs. This work studies interlocking as a rational decision of the owner of a company, as a dependent variable of board's design, and apply the concepts in an emerging market business environment. We found significant associations between interlocking and firm characteristics such as ownership structure, industry and regulation. We finally draw some conclusions on the direct application of corporate governance theories in developing countries.

As creating superior customer value is key to a company’s long-term success (Slater 1997, Woodruff 1997), the notion of value has been emphasized as a critical variable in marketing (Holbrook 1994). Yet, academic literature suggests that the study of customer value is in its infancy (Holbrook 1994, Day and Crask 2000, Flint, Woodruff, and Gardial 2002). Although some progress has been made in the understanding of how consumers perceive value, there is still remarkably little agreement on what constitutes ‘value’, ‘customer value’ and ‘organisational buyer value’ (Tzokas & Saren 1999). In addition, little is known about the dynamic nature of how customers perceive value from suppliers (Flint et al 2002), as most value assessment studies in business marketing typically focus on the value of the physical product, adopt a suppliers’ perspective and neglect the relational dimensions of customer-perceived value (Dwyer and Tanner 1999). This is contrary to the argument underlying the notion of “relationship” and supports the argument for a more complete understanding of the buyers’ perspective.

In 2003, after Carlos Etcheverry joined San Antonio (SA) as Latin American Region Vice President, the company implanted a KAM System. SA’s relationships with its two key clients, Vintage and Chevron, seemed to progress nicely until mid 2004, when Chevron’s newly hired Purchasing Manager decided to change the company’s commercial structure, rendering its purchasing process more bureaucratic and extremely competitive. Most purchasing area employees, all oil business veterans who had worked at the company for many years, were replaced by young professionals, predominantly with engineering or business degrees and more of a financial focus. One of the employees replaced was SA’s key contact at Chevron, with whom its Account Leader was renegotiating contract fees. Additionally, the oil company’s operations area was increasingly losing leverage in decision-making processes, moving towards an advisory-like role in supplier selection. In March 2005, Etcheverry was to meet Chevron´s Procurement Manager, since Chevron had decided to reassign a service contract through a new invitation to bid, leaving San Antonio out, despite the fact that the company had submitted the lowest quotation based on requested specifications. Chevron argued that there had been operating failures, including accidents, and other issues under review by both companies and that SA refuted accordingly. The case poses the questions plaguing Etcheverry at the time of the meeting: was it possible to anticipate this sort of problems? If so, what changes should be recommended? Could those changes enable SA to sustain the steady growth pace it had enjoyed over the past two years? These questions aim at inducing students to contemplate and analyze different decision options regarding a KAM System.

After making a choice people preferred positive features of the chosen options and negative features of the forgone ones, presumably to justify their choices. Follow-up results showed that, after choosing, consumers tended to attribute positive features to the chosen products and negative features to the not chosen ones. Based on these beliefs, people changed their attribute importance ratings such that positive features attributed to chosen products and negative features attributed to forgone products became more important. The latter only held when participants were highly confident about their attributions, suggesting a choice-defensive strategy to support their choices.

This research studies which key drivers are relevant at determining consumer’s overall store price image (OSPI) of grocery stores and identifies its relative importance. Whereas previous research on this topic has investigated the influence of different variables independently, this study was set to build an overall answer for store’s price perception image. The study was conducted in five major cities: Bogotá, Buenos Aires, Mexico City, Santiago in Chile, and Sao Paulo. 3000 consumers were interviewed, and 3000 SKU’s covering 30 categories were monitored using AC Nielsen data over a 32 week period of time. The project was sponsored and funded by The Coca-Cola Retailing Research Council -Latin America, and the field work was commissioned to McKinsey and Co. Eleven elements widely considered to build price perception were classified in five main heterogeneous levers and tested. As a result, the study finds that only two out of the five levers are consistently and broadly relevant accounting for nearly 75% of the price perception. Several findings came out of this effort: As expected, consumers’ diversity was apparent. We identified five major segments with different price attitudes and reactions to promotions. These segments were present in all the five cities covered, but their proportion varied. Retailers’ pricing and promotion policies were analyzed intending to explain these differences from a supply-side perspective. Among the major marketing factors available to a retailer, price related issues are key to form price perception, and consumers consider a limited set of SKU’s to form this price perception. Promotions had a minor role in general, except for those segments more interested in them. Promotions do have a significant role, but in markets where more promotional activity was registered, price accuracy among consumers was lower than in less promotional -more price stable- markets. Naturally, more promotional markets had bigger segments of ‘bargain hunters’, but this didn’t necessarily mean better knowledge of real price level. Quite the contrary: the more promotional the market, the less accurate the price perception. Pricing strategies and promotional activity also had their impact on loyalty to the store. Price differentiation seems to feed store loyalty, while intense promotion tends to blur the perception, with a negative impact on store loyalty.

How corporate social responsibility (CSR) and bottom of the pyramid (BOP) strategies could interact in a synergistic way? Based on two different sets of assumptions on the nature and goals of the firm, this paper develops two paradigms under which that synergy could be created. The first paradigm, which we call instrumental, assumes that the social responsibility of the firm is embedded in its goal of profit maximization. Given this goal and the fact that it is logically impossible to maximize in more than one dimension at the same time, BOP strategies are a means to achieve the profit maximization goal. Therefore, the synergistic connection between BOP and CSR is done using an instrumental or means-end logic: the social responsibility of the firm is the maximization of profits and BOP strategies are alternative means to achieve that goal. The second paradigm, which we call intrinsic, assumes that the social responsibility of the firm is intrinsically embedded in its goals of creating and distributing value. In this view, BOP strategies, when adopted by a particular firm, are necessary parts of the value creation and distribution system. Therefore, the synergistic connection between BOP and CSR is done using a practical or part-whole logic: BOP strategies have not only an instrumental but also an intrinsic dimension that makes those strategies as necessary parts of the value-creation and distribution goals of the firm. In this paper, we argue that this latter paradigm is a better lens to understand the connection between CSR and BOP strategies, because it acknowledges both the instrumental and intrinsic dimensions of these phenomena. However, it stresses that focusing only on the instrumental dimension of CSR and BOP strategies will damage the value creating and distribution goals of the firm in the long run. At the same time, we argue that the intrinsic paradigm provides the criteria for a genuine approach to CSR and BOP, because, going beyond the instrumentality of these phenomena, derives their meaning from a broader view of the nature of the firm and its role in society. As from the development and comparison of both paradigms and based on a series of case studies, this paper concludes with a set of criteria for discriminating between firms more inclined towards an instrumental paradigm and firms more oriented towards an intrinsic paradigm. These criteria contribute not only to managerial self-evaluation but also to future research on the implications of CSR and BOP strategies based on two different set of assumptions about the nature and goals of the firm.

This paper introduces the literature review, research question and research overview for a program of research that has recently been initiated. Few empirical studies show the buyers’ perspective of the different marketing practices implemented by suppliers. The research aims to investigate the value perception accorded by organizational buyers to suppliers’ marketing practices. The research program will be based on a framework derived from work undertaken by Cannon and Perreault, (1999), complemented by a deeper analysis of organizational buyer behavior literature. According to organizational buyer behavior literature buyers differ in many ways, including what they perceive to be important, the decision processes they follow, and the purchases they make. Well-established organizational buyer behavior models highlight the importance of individual buyer (e.g., perceived risk), purchase (e.g., product attributes), environment (e.g., environmental uncertainty), organizational (e.g., size), decision process (e.g., B2C or B2B), and group (e.g., DMU) characteristics (Kauffman 1996). The first three characteristics are accounted for by the factors discussed earlier, while the following two have not been found to affect a company’s choice of any marketing practices (Coviello et al 2001 2002) or, therefore, relationship type. Instead, no research has yet explored whether the group factor affects CMP choices or not. Thus, the DMU complexity factor will be added as another situational determinant for buyer-seller relationships. Finally, since relationship forms reflect conscious choices or uncontrollable circumstances, buying-firm relationship evaluations may provide insights on structures preferred by buying organizations (Cannon et al 1999). The different dimensions of CMP buyer received value judgments may determine important outcomes in business exchanges. To sum up, the result of this research may allow for the evaluation of marketing practices that create value for specific buyer or market segments in different market and organizational situations.

In 2002, Petrobras joined the Argentine fuel retail (gas stations) market. The venture faced several challenges. On the one hand, Argentina was undergoing one of the most severe economic and social crises in history. On the other, the local fuel market was dominated by a few players with brands that held significant consumer mindshare over many years. Additionally, personnel morale at Eg3 –the company acquired by Petrobras to enter the local market- was besieged by uncertainty and disillusionment as a result of a string of mergers and acquisitions and underlying H.R. management remoteness. Finally, the company’s Brazilian origin could jeopardize its appeal for Argentine consumers, given the cultural –and sports-based (soccer)- rivalry between these neighboring countries. The case presents this scenario and calls for decisions associated with service brand definition and strategy formulation for this company across its national borders.

Serving the consumer products needs of Latin America’s sizeable lower income, or “emerging” consumer base may at first glance seem like a tempting opportunity – or perhaps even a necessity—for supermarket retailers in search of new customers. Yet smaller scale retailers already supply a significant portion of fast-moving consumer goods to these segments. Is this the natural order for supermarket retailing in Latin America? Is, as some would claim, the continued success of small-scale retail in Latin America attributable to market inefficiencies? Can large chain retailers create value for emerging consumers and win them as customers? New research across six Latin American countries examines the mindset of emerging consumers and lessons learned from the small-scale retail trade. Our research found that many elements of the conventional wisdom about lower income consumers are unfounded. In spite of being “poor,” emerging consumers have substantial purchasing power as a group—and they exercise their buying power in some quite surprising, yet rational ways. For one thing, it is not a given that these consumers are attracted to low prices or whatever is “low cost.” And they exhibit a very specific set of product, category, and store format needs that distinguish them as consumers from the middle and higher income segments that were typically the focus for many of the large supermarket retailers. These distinct needs imply that it is not “just a matter of money and time” for emerging consumers to change their purchasing patterns. Readers should be careful about falling into the “informality trap” and losing sight of these consumers’ needs, and how small retailers have effectively addressed them. In fact, the evidence shows that smaller scale retailers fit the needs of emerging consumers quite well. Furthermore, small retailers manage to offset scale disadvantages (in areas such as purchasing) and have a sustainable business model—even before the effects of any informality in taxes and labor contributions. Despite perceptions that the small retail sector draws its resilience from informality, we conclude that there is much more to small-scale retailers’ value proposition and business model—and that the sector can be surprisingly efficient.

Organized modern retail formats have based much of its successful expansion in its attraction to the mass consumer, replacing the traditional small formats. Yet in emerging markets, where most of the mass market is placed around or below the line of poverty, small retailers keep attracting customers in spite of the expansion of modern formats. Focusing our research in Latin America, with its typical emerging markets, our main question was why is it that traditional small formats endure in spite of the increasing modernization of retail that took place in the 1990’s?

Understanding consumer behavior seems necessary to help marketers effectively address the needs of the lower-income segments that represent a significant portion of emerging markets. However, the literature indicates that most studies of lower-income consumers have focused on the developed countries. Little attention has been paid to developing regions. Our research objective was to understand what is retail value for emerging consumers?

Marketing scholars have addressed the influence of spatial correlation on consumers’ preferences and companies’ market shares, but no study has yet looked at the influence of spatial dependencies on consideration set membership. We investigate the explanatory power of spatial correlation (i.e., spatial proximity across buyers) for consideration probabilities. Our modeling approach builds upon the spatial probit model developed by Smith and LeSage (2004).We parsimoniously account for the impact of observable and unobservable heterogeneity as well as unobservable spatial dependencies on consideration set membership probabilities. We apply our model to stated consideration set data for new car buyers. We investigate the impact of the spatial interaction on the consideration probability for vehicle types (e.g., pickup trucks) and makes (e.g., Chevrolet). We find a significant spatial interaction in consideration set probabilities for type but not for makes. The magnitude of this correlation coefficient varies by the scale of geographical aggregation. Furthermore, we find that the impact of spatial correlation changes depending on the amount of heterogeneity explained by other model variables. Our findings allow managers to better understand multi-market competition and to customize the product and promotional offers based on geographical area.