TITLE

Deconstructing Each Item's Category Contribution

AUTHOR(S)
Kalyanam, Kirthi; Borle, Sharad; Boatwright, Peter
PUB. DATE
May 2007
SOURCE
Marketing Science;May/Jun2007, Vol. 26 Issue 3, p327
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Retailers and manufacturers believe that the mere presence of certain items in a retail assortment increases the sales volume of the whole assortment. This paper provides an empirical study of the role of every item in an assortment. Our results show that many items affect category sales over and above their own sales volume. After deconstructing the role of a stockout of individual items into three effects--lost own sales, substitution to other items, and the category sales impact--we find that the category impact has the largest magnitude. Interestingly, the disproportionate impact of individual items on category sales is not restricted to top-selling items, for almost every single individual item affects category sales. It seems that variety is indeed the price of entry in retailing. Our results support recent findings that more frequently purchased categories are less adversely affected by reductions in assortment. We also find that the assortment appears to gain attractiveness when certain items are out of stock, a result that is consistent with the discussion in the literature concerning category clutter.
ACCESSION #
25966465

 

Related Articles

  • Capturing the Risk-Pooling Effect Through Demand Reshape. Eynan, Amit; Fouque, Thierry // Management Science;Jun2003, Vol. 49 Issue 6, p704 

    The risk-pooling effect has been documented to benefit inventory systems by reducing the need for safety stock and consequently lowering costs such as inventory holding and shortage penalty. In this paper, we propose a new approach, called 'demand reshape,' to take advantage of the risk-pooling...

  • Eight smart ways to reduce out-of-stocks. Everitt, Lisa // Natural Foods Merchandiser;Feb2006, Vol. 27 Issue 2, p14 

    The article gives advice on how food retailers could reduce out-of-stock situations. Food retailers reported about four percent of sales lost to out-of-stocks each year. A study conducted by Data Ventures and Procter & Gamble Co. has revealed that out-of-stock rates average 7.9 percent in total...

  • OPTIMAL CENTRALIZED ORDERING POLICIES IN MULTI-ECHELON INVENTORY SYSTEMS WITH CORRELATED DEMANDS. Erkip, Nesim; Hausman, Warren H.; Nahmias, Steven // Management Science;Mar90, Vol. 36 Issue 3, p381 

    This paper treats a depot-warehouse system in which demand occurs at the warehouse or retail level. This work differs from a number of other studies in that we allow item demands to be correlated both across warehouses and also correlated in time. Our motivation for this generalization arises...

  • Joint pricing and inventory control for additive demand models with reference effects. Güler, M.; Bilgiç, Taner; Güllü, Refik // Annals of Operations Research;Mar2015, Vol. 226 Issue 1, p255 

    We study a periodic review joint inventory and pricing problem of a single item with stochastic demand subject to reference effects. The random demand is contingent on the current price and the reference price that acts a benchmark against which customers compare the price of a product....

  • An inventory model for non-instantaneous deteriorating items with partial backlogging, permissible delay in payments, inflation- and selling price-dependent demand and customer returns. Ghoreishi, Maryam; Weber, Gerhard-Wilhelm; Mirzazadeh, Abolfazl // Annals of Operations Research;Mar2015, Vol. 226 Issue 1, p221 

    This paper develops an economic ordering policy model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation, permissible delay in payments and customer returns. Shortages are allowed and partially backlogged. The customer returns...

  • PRODUCT VARIETY, PRICING, AND INVENTORY DECISIONS UNDER UNIFORM PREFERENCES. Jun-Yeon Lee // Review of Business Research;2007, Vol. 7 Issue 3, p107 

    We consider the problem of jointly determining product variety, retail price, and inventory level for a retailer who sells a category of product variants to individual consumers. Our model is based on the multinomial logit (MNL) choice model and the newsvendor inventory model. In our model the...

  • Mobile Apps Offer New Trove of Consumer Data. Garry, Michael // Supermarket News Expert Blog;3/5/2012, p14 

    The article discusses the use of mobile applications for processing consumer data. It proposes that consumer data can be used by retailers in decisions pertaining to price, promotion, and demand. It cites the marketing study of Target stores where pregnant women gave feedback about their own...

  • Integrating the Promotional and Service Roles of Retail Inventories. Balakrishnan, Anantaram; Pangburn, Michael S.; Stavrulaki, Euthemia // Manufacturing & Service Operations Management;Spring2008, Vol. 10 Issue 2, p218 

    In some retail contexts, higher inventories not only improve service levels, but also stimulate demand by serving as a promotional tool (e.g., by increasing product visibility). Motivated by a building-products retailer's practice of stocking large quantities of products to stimulate demand, we...

  • Optimal Dynamic Joint Inventory-Pricing Control for Multiplicative Demand with Fixed Order Costs and Lost Sales. Song, Yuyue; Ray, Saibal; Boyaci, Tamer // Operations Research;Jan/Feb2009, Vol. 57 Issue 1, p245 

    This note studies the optimal dynamic decision-making problem for a retailer in a price-sensitive, multiplicative demand framework. Our model incorporates lost sales, holding cost, fixed and variable procurement costs, as well as salvage value. We characterize the structure of the retailer's...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics