Category Captainship: When Should Retailers Outsource Category Management?

28 Pages Posted: 26 May 2011

See all articles by Mumin Kurtulus

Mumin Kurtulus

Vanderbilt University - Operations Management

Alper Nakkas

University of Texas at Arlington

Sezer Ulku

Georgetown University McDonough School of Business; Georgetown University - Robert Emmett McDonough School of Business

Date Written: May 23, 2011

Abstract

Category captainship is a management practice where a retailer relies on one manufacturer in the category for recommendations regarding strategic category management decisions such as assortment planning. This research investigates the conditions under which category captainship practices are more likely to emerge and deliver value to retailers in a context where multiple manufacturers compete for captainship. The scope of category management is (1) deciding on assortment and (2) undertaking (costly) demand enhancing activities. Manufacturers may be more efficient in undertaking demand-enhancing activities, but their capabilities are unknown to the retailer. We find that the retailer's desire to implement captainship is stronger in categories where cost of traffic driving is high. However, other category characteristics also play a role: when the cost of traffic driving is high (low), the retailer's willingness to outsource category management is stronger (weaker) in categories where base traffic, margins, and attractiveness of the products in the category are high and/or operational cost of managing variety is low. Furthermore, we find that intense competition among manufacturers for the captainship role not only has a positive impact on the emergence of captainship but also increases the variety offered to consumers.

Keywords: Supply Chain Management, Retailing, Game Theory

Suggested Citation

Kurtulus, Mumin and Nakkas, Alper and Ulku, Sezer, Category Captainship: When Should Retailers Outsource Category Management? (May 23, 2011). Available at SSRN: https://ssrn.com/abstract=1850908 or http://dx.doi.org/10.2139/ssrn.1850908

Mumin Kurtulus

Vanderbilt University - Operations Management ( email )

Nashville, TN 37203
United States

Alper Nakkas (Contact Author)

University of Texas at Arlington ( email )

Arlington, TX
United States

Sezer Ulku

Georgetown University McDonough School of Business ( email )

Washington, DC 20057
United States

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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