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

See all articles by Sungtak Hong

Sungtak Hong

Bocconi University

Kanishka Misra

University of Michigan, Stephen M. Ross School of Business; University of Michigan at Ann Arbor

Naufel J. Vilcassim

London Business School

Date Written: June 1, 2016

Abstract

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

Suggested Citation

Hong, Sungtak and Misra, Kanishka and Vilcassim, Naufel J., The Perils of Category Management: The Effect of Product Assortment on Multicategory Purchase Incidence (June 1, 2016). Journal of Marketing, 80 (5), 34-52., Available at SSRN: https://ssrn.com/abstract=2308872 or http://dx.doi.org/10.2139/ssrn.2308872

Sungtak Hong (Contact Author)

Bocconi University ( email )

Via Rontgen 1
Milan, 20136
Italy

Kanishka Misra

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

University of Michigan at Ann Arbor ( email )

500 S. State Street

Naufel J. Vilcassim

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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