Measuring the Efficiency of Category-Level Sales Response to Promotions

• 成果类型: Article
• 署名作者: Trivedi, Minakshi; Gauri, Dinesh K.; Ma, Yu
• 署名单位: State University of New York (SUNY) System; University at Buffalo, SUNY; Texas Christian University; University of Arkansas System; University of Arkansas Fayetteville; McGill University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2016.2496
• 发表日期: 2017
• 页码: 3473-3488
• 关键词: efficient frontier; benchmarking; efficiency measurement; Retailing

摘要

In this study, we focus on measuring the efficiency of category-level sales response to promotions across various categories and stores. Our heterogeneous stochastic frontier model allows us to attribute portions of this efficiency to specific characteristics of the stores and categories. Using our full PEM (promotional efficiency frontier) model, we analyze the efficiency of 20 frequently bought categories of a supermarket retailer and apply it to store-category-level data. We find that the average efficiency of category and store sales response across all categories and stores is 84.34%, with low values in categories such as spreads and fresh seafood and high values in categories such as frozen entrees and meat. We find that the variation in efficiency of this sales response can be attributed to specific store and category characteristics such as selling area of store, distance to competition, number of stock-keeping units in the category, and average interpurchase time. Unobserved heterogeneity is captured by the latent class approach that provides support for the existence of three segments. An understanding of the roles played by these characteristics in the efficiency of sales response can aid managers in devising a strategy that maximizes sales.