In or out of focus? Subcategories trigger in-group heterogeneity and out-group homogeneity effects in product assortments

We investigate how the presence of a subcategory influences consumers’ variety perceptions of products in and outside that subcategory. Two experiments show that subcategories trigger in-group heterogeneity and out-group homogeneity: consumers focus on the subcategory of interest, such that perceived variety increases for this but decreases for the alternative subcategory.