Marketing Mix Response Across Retail Formats - The Role of Shopping Trip Types

Abstract

We study differences in the effects of prices, non-price promotions, and brand line length on brand shares at different retail formats. Our conceptual framework rests on the presence of trip level fixed and category level variable utility components and shows how the trade-off between these components results in (i) different formats visited on different types of shopping trips; and (ii) differential marginal sensitivities of brand shares to changes in marketing mix variables across trip types. Together, these provide predictions on how marketing mix variables differentially impact brand shares at various retail formats. We use Nielsen Homescan and store level data from 2011-2014 and analyze the top ten spending product categories across four retail formats - convenience stores, drug stores, supermarkets and mass merchandisers, in over 200 Nielsen markets. We then describe how our findings linking the effects of marketing mix variables with different retail formats has implications for brand manufacturers.

Keywords: retailing, brand share, supermarkets, mass merchandisers, drug stores, prices, line length, marketing mix, shopping costs

JEL Classification: M310, L11, D4