Abstract
This research addresses the problem faced by a category buyer who must decide which subset of SKU’ available from manufacturers to carry. The buyer’ problem can be viewed as consisting of three interrelated parts: (1) assessing the preferences of customers for the competing SKU’, (2) given these preferences, representing the customer’ purchase process among offered SKU’, and (3) given the preferences and customer purchase process, selecting the subset to carry that will maximize the buyer’ goals for the category (e.g., profit, revenue, market share, etc.). Customer preferences are collected via conjoint analysis administered over the web. We represent the customer’ decision process as including the concept of “satisficing”. Optimal assortments are established using a 0,1 mathematical programming formulation. To address the uncertainty of the customer’ purchase when the retailer carries two or more satisfactory products, we consider boundary formulations that compare the best case and the worst case purchases from the point of view of the retailer. Empirical results and insights for each of the three interrelated parts are presented.
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Keywords
- Conjoint Analysis
- Customer Preference
- Shelf Space
- Mathematical Programming Formulation
- Potential Revenue
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© 2015 Academy of Marketing Science
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Miller, C.M. (2015). A Managerial Perspective of Retail Assortments: Deciding What to Carry. In: Sharma, D., Borna, S. (eds) Proceedings of the 2007 Academy of Marketing Science (AMS) Annual Conference. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Springer, Cham. https://doi.org/10.1007/978-3-319-11806-2_41
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DOI: https://doi.org/10.1007/978-3-319-11806-2_41
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Online ISBN: 978-3-319-11806-2
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