The Perils of Category Management: The Effect of Product Assortment on Multicategory Purchase Incidence
Journal of Marketing, 80 (5), 34-52.
51 Pages Posted: 13 Aug 2013 Last revised: 24 Jan 2019
Date Written: June 1, 2016
Retailers determine the assortment for a mix of product categories in a particular space; e.g., the checkout aisle, end-of-aisle shelves, or freezer space. Within such a “target” space, shoppers are exposed to a selection of product categories that are not necessarily correlated in consumption (i.e., neither substitutes nor complements). In this paper, we examine whether the assortment of one category affects a consumer’s purchase incidence decision in another independent category that shares a common display space (e.g., frozen meals and ice cream). We use a multivariate probit model of purchase incidence and incorporate assortment variety captured via an entropy measure. Results from analyzing IRI data and an online experiment provide strong evidence that consumers are less likely to purchase from a category of a given assortment when it is presented with another category assortment of greater variety and that this effect is driven by the display proximity. Further, results from an eye-tracking study point to the consumers’ allocation of limited attention to category assortments as an explanation for the finding. This work serves as one of the first studies documenting the impact of product assortment beyond a focal category, and the results highlight a limitation of individual category management when making product assortment decisions in grocery retailing.
Keywords: Retailing, product assortment, aisle management, cross-category analysis, hierarchical Bayesian model, eye-tracking
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