A comparative analysis of differential consumer response across supermarket and specialty store in the candy category

Retailing industry has undergone tremendous change in its complexity and sophistication over the past few years. Globally we are witnessing the evolution of retailing industry from traditionally micro-managed small retail formats like mom and pop store to modern corporate-managed large retail format...

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Bibliographic Details
Published in:Journal of retailing and consumer services 2012-11, Vol.19 (6), p.561-569
Main Authors: Kumar, Ashish, Trivedi, Minakshi, Bezawada, Ram, Sridhar, Karthik
Format: Article
Language:English
Subjects:
Consumer sensitivity
Multi-category model
Multivariate probit
Retailing
Store format choice
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Summary:Retailing industry has undergone tremendous change in its complexity and sophistication over the past few years. Globally we are witnessing the evolution of retailing industry from traditionally micro-managed small retail formats like mom and pop store to modern corporate-managed large retail formats like supermarkets. Consumers are also shopping across these various store formats even for the products in similar categories. In this research, we posit that consumer purchases in the similar categories may very well be characterized by differential responses to marketing mix across different store formats. The proposed model accounts for the influences that these diverse response parameters and preferences have on one another as well as consumer heterogeneity. Our results show that sensitivities to marketing mix as well as correlations in preferences do indeed vary across formats for consumer purchases in similar categories. ► We offer a heterogeneous model of consumer purchase behavior that studies differential response across different store formats. ► The model is estimated using a panel of households who shop across 2 formats for a similar set of categories. ► We show that consumer responses (and profits) do indeed vary significantly over the different store formats even when purchasing in the similar categories. ► Using profit simulations, we show that firms would benefit from tailoring strategies pertaining to formats. ► Our analysis reveals several countermeasures available to formats less sensitive to promotions.
ISSN:0969-6989
1873-1384
DOI:10.1016/j.jretconser.2012.07.001