Empirical Analysis

Abstract

We support the findings of our analytical study with empirical evidence from the diapers category. We begin the analysis by describing our data set and the different retail chains that form the competitive landscape, in the first section. In the second section, we give a brief profile of each retail chain before analyzing their pricing levels with respect to regular and promotion prices, as well as their promotion strategies, including retail price format and frequency. Further, we provide an in-depth analysis of customer demand, depending on the prices and quantities offered by the retailers, in order to understand the price sensitivity of customers with the aim of decomposing customer demand into segments of loyal and smart customers. We further distinguish smart customers into store-switching and stockpiling customers according to the segmentation in Sect. 4.1.3. From there, we derive the segmentation-based retailer strategies that can be observed in the competitive landscape. Subsequently, we include a second data set containing order quantities of the retail chains on the supply side in order to analyze the correlation between order quantities and the resulting competitive pressure for future periods. We compile the Competition Index and show how this piece of information can be valuable for the retailer in order to forecast promotion activities of his competition in upcoming periods.