The effect of item reduction on assortment satisfaction—A consideration of the category of red wine in a controlled retail setting

This study aims to investigate the effect of item reduction on assortment satisfaction within the red wine category. The study conducted an online experiment using a simulated online wine store. Lowest selling wines were removed after the first buying phase, and the respondents repeated the browsing process in the reduced assortment. A questionnaire measured the shift in perceptions. The results show that assortment perceptions can be maintained in the face of item reduction. There is also a strong association between category familiarity and assortment satisfaction, with differing levels of assortment satisfaction between high and low category familiarity groups. The presence of a favourite item also plays a role in maintaining assortment perceptions. The results suggest that retail managers can reduce assortments by removing low selling items while not affecting customers' assortment perceptions. Furthermore item reduction can be used to increase consumers' satisfaction if they are unfamiliar with the product category. This particular study is limited in the sense that the results were obtained exclusively in an online environment. Future studies may therefore be useful in validating these results in brick and mortar wine outlets.     

Purchase Attributes of Wine Consumers with Low Involvement

Abstract

The past decade has seen a dramatic increase in wine consumption. With this increase comes the need to understand how consumers choose wine. Wine consumers have different types of experiences and expectations, and a one bottle fits all method of catering to wine consumers is not an appropriate marketing strategy. Consumer segmentation based upon involvement with wine is critical to understanding buying behaviors. This study used factor analysis and logistic regression to identify the wine novice and what marketing cues they use to purchase wine. The results identified key marketing cues wine novices use to purchase wine and revealed yet another involvement category: the emerging wine learner.     

Resilience and response of wine supply chains to disaster: the Christchurch earthquake sequence

ABSTRACT

The study of resilience for organisations and their extended supply chains has become an important field given the increase of supply chain disruptions. The 2010 and 2011 Christchurch earthquakes provide an opportunity to examine the resilience of supply chains to a disaster; the specific context of this study is the product category of wine. Theoretically, we use a three phase model of disaster resilience; readiness, response and recovery, to frame our study of the wine supply chain. We adopt a case study method to examine five members of the wine distribution channel, as a subsector of the fast moving consumer goods (FMCG) industry, from the wholesale sector to retail. We identify key factors of supply chain resilience: building performance, distributed networks of locations and IT, owned assets, critical infrastructure and adaptable work force. We report on the actions taken and what can mitigate future risk and enhance resilience in FMCG supply chains.     

Are Consumers Really Bewildered by Overchoice? An Experimental Approach to the Tyranny of “Too Much”

Conventional wisdom advocates that consumers love choice. But just how much? This study delves into this subject by considering the cognitive factors that underpin the consumer’s reaction to plentiful assortment on the shelf, but which may cause “analysis paralysis” and indecision. In an attempt to investigate the above, this study adopts an experimental approach to ascertain what occurs when consumers are faced with a multitude of options within the product category of red wine. The results suggest that if executed correctly, retailers can effectively reduce assortment in such a manner that does not negatively impact perceptions of choice, but does indeed reduce the cost incurred when consumers are forced to weigh up options against each other. Of particular interest, the study finds that product knowledge and experience also has a material effect on the outcome of these endeavors. Hence, both product category familiarity and the nature of the consumer should be factored into the strategic thinking of how a retailer can optimize the merchandise assortment displayed to the customer.     

Commoditization in Food Retailing: Is Differentiation a Futile Strategy?

This article addresses commoditization in food retailing whereby competition has a tendency to lead to a continuous addition of new but similar products in a category. This often results in products that are more homogeneous and may make it more difficult for firms to gain unique market positions. In light of this development, we ask whether product differentiation is a futile strategy in food products marketing. We also address how consumers perceive and react to the seemingly ever-increasing number of similar products. These questions are explored through insights from relevant literature and a small-scale study of a seemingly highly differentiated category—smoked salmon—sold at the flagship store of an upmarket UK supermarket chain. It was concluded that no product attributes could be described as truly innovative, unique, or difficult to imitate. Implications are highlighted and discussed.     

A study on promotion with strategic two-stage customized bundling

In order to enhance both purchase willingness and consumer satisfaction, firms may sell products in a customized bundling way, with which consumers are allowed to select their preferred products to form a bundle. However, such a way needs to be carried out with an efficient strategic tool. This study contributes to the literature by proposing a two-stage customized bundling strategy with the aims of maximizing the firm's profit and satisfying the consumers' demands. The proposed strategy may assist managers in enhancing consumer satisfaction and loyalty under consideration of consumer heterogeneity. Consumers can select one main product with the greatest utility from the main product category at the first stage, and then, at the second, consider the associations between the chosen main and possible add-on products in the add-on product category, and finally select an add-on product to form a customized bundle with the greatest overall utility. Pricing strategies are investigated and compared for the customized and other traditional bundling strategies. The results show that when consumers are highly sensitive in their preferences, the use of a customized bundling strategy would be more profitable. However, in an extreme case when the consumer's perceived value of the add-on product and product association are both high, the traditional individual sales strategy would earn more profits than the customized bundling strategy.     

Combining sell-out data with shopper behaviour data for category performance measurement: The role of category conversion power

Retailers need to manage a series of complex decisions relating to numerous products. To reduce this complexity, they have introduced category management practices, which consider groups of similar products (categories) that can be managed separately as single business units (SBUs). Although the concept that the store offer should be organised as a category mix and that this strategy allows for better overall store management is already consolidated, retailers still struggle to adopt an approach to the store performance measurement starting from a category level perspective. Nowadays, the available methods for measuring categories’ performance are quite limited. The current trend sees the measurement of category performance mainly based on sell-out data that are ill-equipped to fully address category management issues. Retailers should broaden their field of analysis not only by focusing on the product/sales perspective but also by including other methodologies such as shopper behaviour analysis. In this regard, the use of technology offers the retail sector new perspectives for those analysis. Therefore, we intend to contribute to the ongoing debate on the retail analytics topic by presenting a shopper behaviour analytics system for category management performance monitoring. More in detail, we could derive a new key performance indicator, category conversion power (CCP), aimed at analysing and comparing the single categories organised within the store. The research is based on a unique dataset obtained from a real-time locating system (RTLS), which allowed us to collect behavioural data togheter with sell-out data (from POS scanner). We argue that retailers could exploit this new analytical method to gain more understanding at the category level and therefore make data-driven decisions aimed at improving performance at the store level.     

Effects of product-specific word-of-mouth communication on product category involvement

Drawing primarily from categorization theory, this paper presents justification for the effects of word-of-mouth (WOM) communication on product category involvement. Results of an empirical test of this relationship are presented showing an enduring effect of positive WOM communication on product category involvement; this effect was not found for negative WOM. These results suggest that positive WOM about one firm's brand may help competitors by increasing involvement, thus generating more sales (not necessarily of one's own brand) in an entire product category. Our findings, coupled with categorization theory, provide support for a series of propositions presented concerning the effects of changes in product category involvement on nondiscussed brand attitudes and purchase intentions.     

New product decision making: How chance and size of loss influence what marketing managers see and do

This article empirically examines, in a new‐product decision context, the relationships among risk propensity, perceived risk, and risky choice decisions, when risk is operationalized as the chance of loss and the size of loss. The results indicate that perceptions of chance of loss directly influence choice among alternatives possessing different chances of loss and gain, whereas risk propensity directly influences choice among alternatives that differ in their size of loss and gain. The findings extend previous research by identifying dimension‐specific effects (a) between who the decision maker is and the size of an investment's potential loss, and (b) between what the decision maker sees and the chance that an investment will experience a loss. These results not only contribute to theory, but also provide marketing managers with guidance for their risky choice decisions. The composition of a new product's risk has implications for the decisions marketing managers make, for the placement of managers in risk‐sensitive positions, and for the presentation of information to individuals with oversight responsibility for the firm's product strategy decisions. © 2002 Wiley Periodicals, Inc.     

The Impact of Category Captainship on the Breadth and Appeal of a Retailer's Assortment

Category captainship is a collaborative channel arrangement wherein a retailer cedes control of category management decisions, such as developing a marketing strategy to grow the category and assortment selection, to one of the category's leading manufacturers. This paper studies the consequences of captainship practices on the breadth and appeal of a retailer's assortment. We consider a model where multiple manufacturers sell a product to consumers through a common retailer. In the benchmark, the retailer decides on effort to drive traffic into the category and assortment. Under captainship, the retailer delegates both of these decisions to a captain in return for target sales. The capability of the captain to stimulate demand is unknown to the retailer. We find that the breadth and/or appeal of the assortment at the retailer can increase or decrease under captainship relative to the benchmark. We identify three factors that play a role on the impact of captainship on the breadth and appeal of retailer's assortment: (i) the retailer's beliefs about the captain's capability, (ii) the captain's true capability, and (iii) product set heterogeneity. We find that the benefit to the captain sometimes comes at the expense of the non-captain manufacturers, but we also identify conditions where captainship can be beneficial for not only the retailer and the captain but also the non-captain manufacturers.     

An Extended PROMETHE II Multi-Criteria Group Decision Making Technique Based on Intuitionistic Fuzzy Logic for Sustainable Energy Planning

The implementations of Preference Ranking Organization Method for Enrichment Evaluation (PROMETHEE) category to complex multi-criteria group decision making (MCGDM) scenarios have been included in thousands areas. Outranking methods such as PROMETHEE II are also greatly employed in energy planning application. In MCGDM methods if decision makers (DMs) are not able to treat precise data in order to define their preferences, the intuitionistic fuzzy set (IFS) theory enables them. IFS attributes are connected with the degree of membership and non-membership, and can be used to draw uncertainty in group decision-making situations. In this paper, a new version of the PROMETHEE II method is proposed, aiming at solving MCGDM problems. Linguistic variables are expressed in the membership function and non-membership function of IFS which are used to assess the weights of all criteria and the ratings of each alternative with respect to each criteria. Conditional normalized Euclidean distance measure is adopted to measure deviations between alternatives on intuitionistic fuzzy set. Then, a ranking algorithm is applied to indicate the order of superiority of alternatives. Finally, a practical example is given to an application of sustainable energy planning to verify our proposed method. Additionally, a comparative analysis is done among the proposed PROMETHEE II method and the intuitionistic fuzzy technique for order preference by similarity to ideal solution (IF-TOPSIS) method and elimination and choice translating reality method (IF-ELECTRE).     

Decision-making patterns among international vacationers: A cross-cultural perspective

While there is a tendency to define world subcultures in terms of geographic or sociocultural criteria, the present research suggests that life styles may have become more homogeneous across geographic boundaries and could provide alternative ways of defining world subcultures. The study addresses the research question using international travel behavior. The results suggest that life style segmentation could be used to supplement geocultural criteria for defining world subcultures and formulating marketing strategy.     

Analysis of multiple criteria decision support systems for cooperative groups

This article reviews research on multiple criteria decision support systems for cooperative groups. The systems included in this survey integrate concepts from group decision theory, multiple criteria decision methodology, and decision support system technology. Three dimensions are considered in the analysis of existing research: the multiple criteria decision technique used to generate decision alternatives or to choose from a given set; the method used to facilitate individual compromise and group consensus; and the application category, if any.     

Regional and Categorical Patterns in Consumer Behavior: Revealing Trends

We offer a method of analysis that allows for an “unbundling” of the data to a disaggregate household level, and then “rebundling” it in a manner designed to identify patterns and relationships which are otherwise masked. Applying the method in the context of ‘healthy’ products and using census block group level data, we study consumption over several categories in two locations. The analyses show that studies involving geographically dispersed data must test for, and take into account when required, conceptually sound spatial effects in order to accurately assess impact. We also show that while both location and the product category have a significant impact on the proportion of healthy products purchased, the degree to which consumers choose healthier alternatives is a function of the category as well as the location. Finally, we provide preliminary evidence from survey data that supports the variations we find, and further explores attitudinal differences as well. There are rich implications for retailers in that new products introduced to benefit from popular trends (such as ‘healthy’ alternatives) may not succeed for all categories or locations. Retailers would benefit from understanding the spatial, demographic and attitudinal effects that play into consumption behavior, and such effects can be better understood when studying choice at the category and region level. Finally, public policies aimed at promoting healthier purchasing habits may have greater impact if special attention is given to specific categories and regions.     

All Things Being Equal

Abstract

While many consumers enjoy beer, wine and spirits and while many restaurant professionals believe they understand the differences among the three categories, myths and misconceptions abound within the field of beverage alcohol. By observing the production processes for each category it is evident that beer, wine and spirits are more alike than different and consumer preferences and foodservice recommendations should focus on taste, price, food selection and other subjective factors rather than misinformation as to essential nature. Physiological reactions to alcohol beverages are predicated more on the number of ethyl alcohol molecules ingested than on chosen beverage category. As production processes evidence, standard servings of 12 ounces of beer, 5 ounces of table wine and 1.5 ounces of 80 proof distilled spirits contain equivalent amounts of chemically identical alcohol. Restaurant personnel should observe drinking patterns of beer and wine consumers as closely as spirits drinkers for adverse consequences.     

Organizational characteristics and the CRM adoption process

The purpose of this study is to identify the status of Customer Relationship Management (CRM) adoption and explore the influence of organizational characteristics on the CRM adoption process in the Korean fashion industry. Using Rogers' [Rogers EM. Diffusion of innovation. New York: Free Press; 1995] innovation decision process model as the conceptual basis, this study surveyed 94 Korean fashion companies to investigate the persuasion, decision, and implementation stages of CRM adoption. Organizational variables included firm characteristics (size, strategy, maturity of information system), product characteristics (category, fashion position, seasonality), and CEO characteristics (age, education). The most frequently used CRM technology is the development of a customer database, whereas the mostly frequently mentioned benefits of CRM are encouraging repurchase. Moreover, respondents' perceptions of CRM benefits affect CRM adoption, influencing the use of various CRM technologies. Organizational strategy, maturity of information system, and product category all significantly influence the adoption process. Empirical findings provide further support for the innovation decision process model developed by Rogers [Rogers EM. Diffusion of innovation. New York: Free Press; 1995] and the CRM adoption model can be used when fashion companies do strategic planning and evaluate the possibility of adopting CRM strategies.     

Using emotional benefits as a differentiation strategy in saturated markets

The high level of product substitution in most consumer markets often makes it difficult to match supply with demand, especially in sectors with mature, saturated markets with intense competition and a high degree of product differentiation. The difficulty of using technical characteristics such as quality and/or price to differentiate products suggests that marketers could profit from gaining more insight into the way in which consumers' purchase decisions are influenced by their perceived emotions. This paper investigates this issue in the wine market, a highly saturated market with homogeneous supply, obtaining results that appear to support the notion that emotions do indeed play a part in consumer choice structures, which show a higher degree of abstraction in those segments that report a greater number of perceived emotions. This considerably complicates the task of creating a differentiated marketing strategy, in the sense that suppliers need to give much greater consideration to consumers' self‐awareness. © 2009 Wiley Periodicals, Inc.     

The fight between store brands and national brands—What's the score?

In the Western world market shares for store brands have increased across all product categories. The competitive position of store brands compared to national brands may depend on the product category and a retail chain's overall brand assortment strategy. In order to investigate these possible chain and category effects we have selected five chains with different store brand strategies and three product categories that differ with respect to the number of strong national brands in a category. The results we report focus on the competitive position of store brands compared to national brands from a consumer point of view. We find that store brands are in a weak competitive position compared to national brands independent of category and retail chain brand assortment strategy.     

Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

The Secretary Problem Revisited - The Group Decision-Making Perspective

We consider a decision situation where there is an initial set of alternatives that may be augmented, a variant of the problem known in the literature as the "secretary problem". We focus the discussion on the special case of group decision-making, where a group or committee is charged with the responsibility of negotiating the decision. We investigate situations of explicitly stated (multiple) criteria and the simpler situation of no such stated criteria. The former case includes the congenial, the mixed, and the uncongenial cases, where the individuals agree on the direction of all, some, or none of the criteria, respectively. We offer a framework within which a group of individuals can be supported in such a decision process. In the case of explicit criteria, we provide the decision-makers with probability information of the likelihood of finding more preferred alternatives provided the initial set of alternatives is expanded. The framework is tested using a simulated real-world choice situation.