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Marketing at the retail shelf: an examination of moderating effects of logistics on SKU market share

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Abstract

Given that the impact of retail shelf facings and price on a product’s market share is of substantial interest to marketing managers in the retail supply chain, we examine whether these relationships may be interdependent with the firm’s supply chain activities. We offer predictions regarding the interdependence of the marketing and supply chain variables using monthly in-store observations from 62 different retail stores from five different chains, taken over a 24-month period. The in-store observations included price and number of facings, which is combined with data obtained from the manufacturer on case pack quantity and market share data from the ACNielsen HomeScan consumer scanner panel. Results indicate that shelf facings impact the effects of price and case pack quantity on market share. In addition, we explore the strength of relationships across retailers employing everyday low price versus HiLo pricing strategies. Generally, our findings suggest that retailers and suppliers must work to integrate marketing activities and supply chain processes both within and across firms to most effectively serve the consumer at the retail shelf and increase market share.

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Notes

  1. In this study we focus on retail shelf facings as one key independent variable in predictions, but we also obtained a measure of total shelf capacity. We found that facings and the shelf capacity measure were very highly correlated (r = .92), and when shelf capacity was used instead of facings, it produced identical results for our specific tests of predictions. Because facings are more directly associated with the consumers’ exposure to the SKU and perceptual experience at the retail shelf, and given the similarity of findings, we used facings in tests of predictions.

  2. Our focus for these complex interactions is for the overall set of retail stores, but we also explore any potential differences in these interaction effects on market share for stores using the EDLP and HiLo pricing strategies.

  3. We also ran these meditational tests including the controls and other independent variables shown in Table 3. These findings also revealed partial mediation of facings. In a separate test, we assessed whether the effect of shelf replenishment frequency (SRF) on share was mediated by facings. Although not as strong as the meditational role of facings for case pack, this test also revealed that facings acted as a partial mediator of the effect of SRF on share (Sobel test z = 7.14, p < .01).

  4. We also collected information on price per ounce for each SKU. Regression analyses using price per ounce rather than absolute price produced consistent results in our tests of H2–H4. Because we use product size (in ounces) as an instrumental variable for price in 2SLS models, we focus on analyses utilizing absolute price rather than price per ounce.

  5. Multicollinearity often will result from including two similar interaction terms in a model combined with the original variables used to form the interactions and the reversal of signs is a classic problem associated with multicollinearity (e.g., Hair et al. 2006; Mason and Perreault 1991). Further, we also performed this regression when excluding the SRF direct effect as a predictor, but including the two and three-way interaction terms. When the direct effect of SRF is not included in the model, the three-way interaction is positive and significant (but not large relative to the other coefficients), consistent with the bivariate correlation.

  6. To test if there were influential effects related to outliers, we also ran models in which both smaller case pack sizes and larger number of facings were omitted from the data set. The coefficients for all direct and moderating relationships with share were consistent with those shown in Table 3, offering further support for predictions related to the predicted direct and moderating effects.

  7. We formally tested for the endogeneity of price, using the two-step Hausman test (Wooldridge 2002, pp. 118–120). From the Hausman tests, we conclude that price is an endogenous (p < 0.01) predictor variable. We also tested facings for endogeneity using the same method as we used for price. Unfortunately, due to a lack of a suitable instrument in our data set, we were not able to test facings using the same method used to test price in the 2SLS.

  8. We thank an anonymous reviewer for suggesting this mediation test and point regarding this relationship.

  9. For our study, we interviewed an executive for the manufacturer participating in this study who has worked in the RTE cereal industry for the past 38 years, and he estimated that some 2% to 3% of cereal sales in participating stores are sold in the center aisle. Based on this information, we believe our results are not significantly impacted by center aisle sales for these participating chains and this category, but findings for other categories, stores, and contextual market conditions remain of interest.

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Authors and Affiliations

  1. Department of Marketing and Logistics, 302 BA, Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR, 72701, USA

    Matthew A. Waller, Andrea Heintz Tangari & Scot Burton

  2. Department of Information Systems and Supply Chain Management, Texas Christian University, TCU Box 298530, Fort Worth, TX, 76129, USA

    Brent D. Williams

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  1. Matthew A. Waller
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  2. Brent D. Williams
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  4. Scot Burton
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Correspondence to Scot Burton.

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The authors express their appreciation to the three anonymous reviewers and the Special Issue Editors for their helpful and constructive comments.

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Waller, M.A., Williams, B.D., Tangari, A.H. et al. Marketing at the retail shelf: an examination of moderating effects of logistics on SKU market share. J. of the Acad. Mark. Sci. 38, 105–117 (2010). https://doi.org/10.1007/s11747-009-0146-0

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