Brand-Level Effects of Stockkeeping Unit Reductions

Journal of Marketing Research, Vol. XLIV (November 2007), 545–559

Robert H. Smith School Research Paper No. RHS 2552205

16 Pages Posted: 21 Jan 2015

See all articles by Jie Zhang

Jie Zhang

University of Maryland - Robert H. Smith School of Business

Aradhna Krishna

University of Michigan, Stephen M. Ross School of Business

Abstract

When retailers make product assortment changes by eliminating certain stockkeeping units (SKUs), how does this affect sales of individual brands? This is the main question the authors address in this article. Using data from an online retailer that implemented a permanent systemwide SKU reduction (SR) program, the authors investigate how the program affected various components of purchase behavior for individual brands. They find substantial variations in the SR effects across brands, categories, and consumers.They explore possible drivers for these differences and find that higher-market-share, higher-priced, and more frequently promoted brands tend to gain share and that reduction in the number of sizes, reduction in the number of SKUs, and change in SKU share in the category are important in affecting change in a brand’s purchase share after the SR.They also find that SRs lead to an increase in category purchase incidence and quantity for highly state-dependent consumers and frequent buyers but a decrease in category purchase and quantity for mildly state-dependent consumers and infrequent buyers.In addition, SRs tend to cause more changes in brand choice probabilities among consumers of lower state dependence and higher price and promotion sensitivity.These findings are of importance both to retailers wanting to make product assortment changes and to manufacturers affected by them.

Suggested Citation

Zhang, Jie and Krishna, Aradhna, Brand-Level Effects of Stockkeeping Unit Reductions. Journal of Marketing Research, Vol. XLIV (November 2007), 545–559, Robert H. Smith School Research Paper No. RHS 2552205, Available at SSRN: https://ssrn.com/abstract=2552205

Jie Zhang

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Aradhna Krishna (Contact Author)

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

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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