Product Category Level Research Articles

Always on your mind? – investigating consideration sets and private labels at the retailer and category level

ABSTRACT The consideration set has been widely studied as a consumer tool to simplify purchase decisions. However, important questions remain about how a retailer’s private label strategy may impact consumers’ consideration sets. In the present study, we employ the Associative Network Theory of Memory as a theoretical foundation and examine how private label consideration at the retailer level may affect consumers’ decision-making at the product category level. Results from two empirical studies indicate that a higher number of private labels considered at the retailer level enhances consideration set heterogeneity at the category level. Critically, this stimulated heterogeneity further increases the purchase probability of private labels in consumers’ consideration sets. This chain of effect also adds explanatory power to the impact of private label attitude on private label purchase probability through serial mediation. Consequently, retailers are encouraged to dilute consumers’ consideration sets by constructing and communicating a diverse private label portfolio.

Availability restrictions and mandatory precommitment in land-based gambling: effects on online substitutes and total consumption in longitudinal sales data

BackgroundGambling causes important harms in societies. According to the public health approach, the most effective policies to reduce harms target full populations. Availability restrictions and mandatory precommitment are among the most effective measures. However, restrictions on the availability of some gambling products or channels may also be offset by increased consumption in other products. Substitution effects can have negative public health impacts due to differing harm potential across different gambling products. This paper uses longitudinal sales data (2019–2022) from the Finnish gambling monopoly Veikkaus. During the observation period, the availability of gambling was restricted in Finland due to subsequent waves of Covid-19-related restrictions. In addition, the gambling monopoly introduced mandatory precommitment to land-based EGMs. We focus on how these restrictive policy changes impacted the total consumption of gambling and possible substitution effects.MethodsThe Finnish gambling monopoly provided weekly theoretical loss data per gambling product category and gambling channel (online, land-based) for the period of January 2019 – July 2022 based on a statutory obligation. We analysed the effects of availability restrictions and other public health measures on the consumption of different products using descriptive time series and regression analyses. We compared the sale of land-based products to online equivalents at product category level and included main policy change periods in the models.ResultsTotal consumption of gambling declined during 2019–2022 mainly due to reduced land-based electronic gambling machine (EGM) consumption. Declines in land-based EGM sales were not offset by online alternatives or other close substitutes in the long term. However, during the first wave of Covid-19, there was an observable substitution of land-based table games by online alternatives and land-based horse betting and possibly sports betting by online horse betting. Overall, the results also show that Covid-19 functioned as a boost to an already existing trend of increasing digitalisation of gambling.ConclusionsThe study provides empirical support for the effectiveness of public health-oriented policies in reducing the total consumption of gambling. Availability restrictions and mandatory precommitment are therefore likely to also reduce the burden of harms of gambling to individuals and societies.

The impact of forest management certification on exports in the wood sector: Evidence from French firm-level data

Forest certification, originally introduced to promote sustainable forest management and protect forests from threats such as deforestation, has become a large-scale market tool. There is no consensus in the literature on the impact of forest certification on exports. Few studies have analyzed the impact of forest management certification on exports, and none have analyzed this effect at the firm level, taking into account firm heterogeneity. The current paper aims to fill this gap by analyzing the impact of the difference in the level of forest management certification between an exporting country and importing or destination countries. In particular, we determine how this impact differs by firm size. Our study focuses on the Programme for the Endorsement of Forest Certification (PEFC). We use a panel of exports of wood and wood products at the level of French firms. We find that when the level of forest management certification in the exporting country increases relative to that of the importing countries, exports increase; but this occurs to a lesser extent as firm size increases. This result is robust to the various additional analyses. For example, an increase in the difference in the share of PEFC-certified forests by 0.15 is associated with a 90% increase in the value of exports. We also find heterogeneity by product category, geographic area, and income level of destination countries. Our study highlights the role played by forest certification on exports and the need to develop forest certification in a market-driven manner.

Supply Chain Demand Forecasting and Price Optimisation Models with Substitution Effect

Determining the optimal price of products is essential, as it plays a critical role in improving a company’s profitability and market competitiveness. This requires the ability to calculate customers’ demand in the Fast Moving Consumer Goods (FMCG) industry as various effects exist between multiple products within a product category. The substitution effect is one of the challenging effects at retail stores, as it requires investigating an exponential number of combinations of price changes and the availability of other products. This paper suggests a systematic price decision support tool for demand prediction and price optimise in online and stationary retailers considering the substitution effect. Two procedures reflecting the product price changes and the demand correlation structure are introduced for demand prediction and price optimisation models. First, the developed demand prediction procedure is carried out considering the combination of price changes of all products reflecting the effect of substitution. Time series and different well-known machine learning approaches with hyperparameter tuning and rolling forecasting methods are utilised to select each product’s best demand forecast. Demand forecast results are used as input in the price optimisation model. Second, the developed price optimisation procedure is a constraint programming problem based on a week time frame and a product category level aggregation and is capable of maximising profit out of the many price combinations. The results using real-world transaction data with 12 products and 4 discount rates demonstrate that including some business rules as constraints in the proposed price optimisation model reduces the number of price combinations from 11,274,924 to 19,440 and execution time from 129.59 to 25.831 min. The utilisation of the presented price optimisation support tool enables the supply chain managers to identify the optimal discount rate for individual products in a timely manner, resulting in a net profit increase.

Location effects: Geo-spatial and socio-demographic determinants of sales dynamics in brick-and-mortar retail stores

For brick-and-mortar retail operators, store location is an essential prosperity factor, affecting the volume and structure of sales. Understanding the complexity of location effects on sales dynamics and utilizing such information may be the key element of corporate success in a competitive market environment. In general, store locations can be characterized by representative sets of geo-spatial and socio-demographic features. Nowadays, multiple sources of location-related data are available from public authorities and other open sources. However, using such data may be a complex task: distinct location factors can have divergent effects on sales of different types of products. Hence, our objective is to quantify the effects of different measures of location on sales dynamics over a wide range of product categories. For this purpose, we introduce a methodology combining econometric modeling and cluster analysis. The presented empirical analysis is performed using data on 479 brick-and-mortar shops of a major drugstore chain operating in Czechia (2019 data are used to avoid distortions due to COVID-19). Besides estimating location effects on sales at the product-category level, we identify and evaluate groups (clusters) of product categories with similar sales dynamics. Both the methodology proposed and the empirical results presented can be utilized by different retail chains to assess and plan brick-and-mortar store locations. Also, the research presented can be instructive for academic researchers and other stakeholders in the fast-moving consumer goods sector.

PET FOOD СLASSIFICATION

Background. The assortment of products for pets is very wide and includes va­rious subgroups. The promising market for these products is supported by data from the pet food market, which is one of the most dynamic in the world. However, other sub­groups of these products are practically not covered in the domestic literature, there are no works on the classification of the assortment of goods for animals. The aim of the article is to develop a classification of food for them based on an analysis of the assortment of products for pets. Materials and methods. General scientific and special methods of cognition of economic processes are applied: analysis and synthesis, system approach, comparison and generalization. Information base of the research: official data of the State Statistics Service of Ukraine and the State Fiscal Service of Ukraine, as well as the assortment of goods for animals presented in online stores. Results. In accordance with the current classifiers, separate groupings that directly relate to products for pets are provided only for feed and brushes for caring for animals. At the UKTZED product category level, dog or cat food packaged for retail is classified according to the content of starch, glucose or glucose syrup, maltodextrin or maltodextrin syrup, lactic products. According to the results of the analysis of the assortment of goods in the category "Products for animals" (or "Pet goods") in most online stores, including specialized ones, the attribute "Animal species" is used at the highest level of classification. At the next level of classification, products for a particular species of animals are divided into the groups "Food", "Care and hygiene", "Toys", "Utensils" and others. Another method to grou­ping this category is that the assortment of these goods is divided into 2–4 subgroups according to their functional purpose ("Food", "Toys", "Accessories", "Hygiene and care"), and at the next level – by species of animals for which the goods are intended. The largest share in the assortment of products for pets is food. The assortment of food for dogs and cats is classified according to almost identical characteristics: depen­ding on the age, breed, activity and state of the animal’s body, by the type of food, the main source of protein in the food, therapeutic and prophylactic purposes, class, type of packaging, mass or volume of feed in the package. The assortment of food for birds and fish is also complex: the proposed classification includes 9 characteristics. Significantly fewer traits were used to classify the assortment of food for rodents and reptiles (5 and 7 traits, respectively). Conclusion.The market of goods for pets in Ukraine is promising, given its large potential capacity, which today is limited by the low paying capacity of the population. The assortment of goods for pets is wide and includes a significant number of assortments grouped and types of goods. The classification of pet food developed in this work indi­cates that the assortment of these products is complex and can be classified in at least 5-10 signs, depending on the type of pet for which the feed is assigned.

The fit of competitive strategies and firm-specific advantages with country-specific advantages in explaining manufacturing location choices

PurposeThis paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location choices at product category level in the European automotive industry.Design/methodology/approachSeven hypotheses are formulated and tested using binomial logistic regression with data from 148 passenger car models (i.e. product category level) that are sold in Europe and manufactured in countries that offer CSAs of either cost advantages or differentiation advantages. The first four hypotheses test manufacturing location choices of product categories pursuing cost leadership strategy, differentiation strategy, focus strategy and hybrid strategy. The other three hypotheses test whether FSAs of R&D capability, marketing capability and operations capability will impact on the manufacturing location choice. The tests control for the type of passenger cars as well as the manufacturer’s region of origin.FindingsWhile pursuing cost leadership strategy leads to manufacturing in countries that offer cost advantages, pursuing differentiation strategy as well as strong R&D capability and marketing capability result in manufacturing in countries that offer differentiation advantages. Focus strategy, hybrid strategy and operations capability do not have an impact on the manufacturing location choice at product category level.Research limitations/implicationsConducting empirical research at product category level is subject to limitations in the choices of FSAs due to lack of availability of data.Practical implicationsManagers should assess the competitive strategies and FSAs of their product categories and then decide about manufacturing locations based on their fit with host country CSAs. Policymakers should understand the CSAs of their countries and target to attract manufacturing FDI from product categories with matching competitive strategies and FSAs.Originality/valueThe research contributes to discussions in explaining manufacturing location choices. Its originality lies in being the first study to test the fit of competitive strategies and FSAs of product categories with CSAs.

Elementary Index Bias: Evidence for the Euro Area from a Large Scanner Dataset

Abstract We provide evidence on the effect of elementary index choice on inflation measurement in the euro area. Using scanner data for 15,844 individual items from 42 product categories and 10 euro area countries, we compute product category level elementary price indexes using eight different elementary index formulas. Measured inflation outcomes of the different index formulas are compared with the Fisher ideal index to quantify elementary index bias. We have three main findings. First, elementary index bias is quite variable across product categories, countries and index formulas. Second, a comparison of elementary index formulas with and without expenditure weights shows that a shift from price only indexes to expenditure weighted indexes would entail at the product level multiple percentage points differences in measured price changes. And finally, we show that elementary index bias is quantitatively more important than upper level substitution bias.

Tariff evasion in global trade data

ABSTRACTWe find evidence of pervasive tariff evasion in the global data on trade from 1988 to 2015. Using over 35 million observations of data on import and export flows at the HS6 product category level, we find evidence of substantial underreporting of imports relative to export data on average and particularly when tariffs on product categories are high. These effects are stronger in more corrupt destination countries, as measured by the World Bank's Worldwide Governance Indicators [World Bank. 2016. Worldwide Governance Indicators. September 25, 2016]. In addition, evidence of tariff evasion increases significantly in economic downturns. We document these patterns in the global data and explore the welfare effects of this evasion by (1) putting a lower bound on the extent to which there are revenue losses from tariff evasion, and by (2) estimating the effects of corruption as measured by this indicator on global trade in a simple gravity model. We estimate that in total, revenue losses from tariff evasion are currently likely to exceed 400 to 670 million USD globally per year, and find that the effects of corruption on trade flows are ambiguous overall but change from weakly positive (‘grease the wheels’) to largely negative over the years in our sample.

The role of customer engagement in the involvement-loyalty link

PurposeThe purpose of this paper is to investigate the relationship between the different dimensions of involvement and customer engagement (CE) and analyze the influence of CE on loyalty in an online retail context. The study also tests the mediation of CE between the facets of involvement and loyalty.Design/methodology/approachThe study employed a survey for data collection from online retail website users and analyzed the data with partial least squares – structural equation modeling.FindingsThe results reveal that the dimensions of involvement drive engagement differently. The risk importance and risk probability do not influence CE whereas the sign, interest, and pleasure are positively associated with CE. Furthermore, CE mediates the link between sign, interest, and pleasure dimensions of involvement and loyalty.Practical implicationsThis study provides insights for the managers that the perception of value from a brand starts at its product category level and values like sign, interest, and pleasure can be provided to the customers by not only brand consumption but also by engaging them with the brand.Originality/valueThis is among the first studies to have empirically tested the effect of dimensions of involvement on CE and explain the role of engagement as a means for the customers to achieve expected values. It also contributes to the extant CE literature by testing its mediating role between involvement dimensions and loyalty, thus augmenting the studies, which have explored the antecedents and consequences of CE.

Retail store operations and food waste

This paper focuses on the issue of food waste from a retail and store operations perspective, with the aim to identify the root causes of food waste occurrence at a retail store level across different store formats and product categories. To achieve this, we first conducted case studies, including semi-structured interviews with store managers. This exploratory research involved 28 cases across dominant retail store formats (i.e., super- and hypermarkets and discount and convenience stores). The results along with secondary data research underlie a process simulation modeling approach that quantifies the impact of selected root causes of food waste by considering the dependencies between them. Finally, we conduct semi-structured interviews with 12 food waste experts to confirm findings of the case studies and simulations and to delineate the practical implications of our research and the related solutions. Our findings show that the root causes of food waste are related to undesirable customer behavior and erratic demand, inefficient store operations and replenishment policies, and elevated product (quality) requirements of both retail organizations and customers. Root causes and their impacts differ across store formats and product categories. Furthermore, the interdependencies between the root causes in the different spheres of responsibility and influence (i.e., customers, the store, and the parent organization) are evident. The paper contributes to the literature by providing detailed understanding of retail operations related to the occurrence of food waste across store formats at a product-category level and revealing pathways for preventing and reducing the occurrence of food waste at a retail store level.

Patterns of regional inflation persistence in a C.E.E. country. The case of Poland

This paper investigates patterns of regional inflation persistence in Poland, a representative Central and Eastern European (C.E.E.) country. This study first argues that the C.E.E. perspective is relevant in the context of this study, due to the recent transitions, incomplete processes of forming forward-looking inflation expectations and pronounced spatial inequalities. Using individual and panel regressions on disaggregate data, this study provides evidence of the aggregation bias and marked differences in inflation persistence across product categories. Furthermore, it shows that cross-regional differences in inflation persistence remain, even after controlling for the product category. While this study generally confirms the earlier finding of Vaona and Ascari that more backward regions exhibit higher consumer price index inflation persistence, we also show that the picture is more nuanced at the product category level.

Product Seeding: Word-of-Mouth Effects For and Beyond the Focal Product

Abstract In a classic seeded WOM marketing campaign, a company sends product samples to a selected group of influencers, and encourages them share the product information and their own opinions with other consumers. Positive effects include more WOM for the focal product in the target segment, but also in additional segments. But there are additional spillover effects on the brand and the product category level and they are negative. More conversations about the focal product reduced the “off-topic” conversations about other brands in the same category as well as other products of the same brand. These negative brand and category spillover effects are stronger when the focal product is of a more functional nature. Marketers tend to consider only positive spillovers to be beneficial for a company, but negative spillovers should not be immediately classified as “bad news.” There are upsides to this effect that managers can use in their favor.

Building an innovation-based supplier portfolio: The use of patent analysis in strategic supplier selection in the automotive sector

With an increasing proportion of external spend allocated to a smaller number of suppliers in their supply base, car manufacturers rely more and more on the performance of key supply chain partners outside their own organisational boundaries, particularly for product innovation. The identification and selection of innovative suppliers for strategically important supply categories require tools to determine which supply categories are supplier innovation-led and which suppliers are the most innovative. Here we discuss the use of patent analysis to identify product categories where supplier-led innovation is important, and which suppliers are leading innovation. We use data from the US patent office to analyse two important product innovation supply categories – car body technologies and car seats – from a leading premium automotive producer's supply portfolio. From the patent filings data we identify the innovation activities of car manufacturers and suppliers in each category over an eleven year period. It is evident from the analysis that innovation in car body technologies is dominated by the car manufacturers whereas innovation in car seats is strongly supplier-led. The results of the patent analysis are used to develop and discuss supply management options for the case company. Insights gained from patent analysis can be used to support procurement and sourcing processes at different levels: to identify innovation-active product categories at a supply portfolio level; to assess the innovativeness of potential suppliers at a product category level; and to identify which tier in a supply chain is active in product innovation at a supply chain level. Broader issues on the potential of patent analysis to inform and support procurement and sourcing processes are discussed.

WYSIWYG—Seeing is Believing: Consumer Responses to Levels of Design Newness, Product Innovativeness, and the Role of Country-of-Origin

ABSTRACTThere is a dearth of new product design research that investigates the impact of varying levels of design newness coupled with technical newness on consumer evaluations for incremental and radical innovations across utilitarian and hedonic product categories through the lens of country-of-origin (COO). In today's world, innovation may originate from both developed and emerging economies. Our research investigates consumer responses when incrementally new and/or radically new products come from developed as well as developing countries. Through four experimental studies, we found that consumers preferred high level of design newness in incrementally innovative utilitarian product category and low level of design newness in radically innovative utilitarian product category when products originate from developed countries (developed COO situation). High level of design newness was preferred for both incrementally new and really (radically) new utilitarian products originating from developing countries (emerging COO situation). In contrast, consumers preferred high level of design newness in both incrementally and radically innovative hedonic product categories during developed COO situation; and consumers preferred high level of design newness for incrementally new hedonic products while avoiding radically new hedonic products completely during emerging COO situation. The results have important implications for researchers and managers in developing incremental and radical innovations by understanding differential performance effects of levels of design and technical newness with respect to developed versus emerging COO situations and consumer purchase intentions.

How Product Category Shapes Preferences toward Global and Local Brands: A Schema Theory Perspective

In contrast to the abundance of research on brand- and consumer-related determinants of global/local brand preference, little is known about whether and how the product category affects consumer choices between local and global brands. Drawing from schema theory, the authors (1) argue that consumers rely on their product category schemata to form perceptions of global versus local brand superiority, (2) introduce a compact scale to measure these perceptions, and (3) identify the key antecedents and consequences of these perceptions. Two studies in developed and emerging markets empirically support the hypotheses across multiple product categories, for both real and fictitious brands. The results indicate that consumers perceive global brands as superior to local brands in product categories with strong functional character and extensive symbolic capacity. Moreover, brands congruent with category superiority perceptions are preferred because of their justifiability, while brands that deviate from these perceptions are avoided because of their proneness to normative criticism. The findings imply that global/local brand preference is largely formed at the product category level and advocate for the use of category-specific strategies in global/local brand management.

A data mining framework for targeted category promotions

This research presents a new approach to derive recommendations for segment-specific, targeted marketing campaigns on the product category level. The proposed methodological framework serves as a decision support tool for customer relationship managers or direct marketers to select attractive product categories for their target marketing efforts, such as segment-specific rewards in loyalty programs, cross-merchandising activities, targeted direct mailings, customized supplements in catalogues, or customized promotions. The proposed methodology requires customers’ multi-category purchase histories as input data and proceeds in a stepwise manner. It combines various data compression techniques and integrates an optimization approach which suggests candidate product categories for segment-specific targeted marketing such that cross-category spillover effects for non-promoted categories are maximized. To demonstrate the empirical performance of our proposed procedure, we examine the transactions from a real-world loyalty program of a major grocery retailer. A simple scenario-based analysis using promotion responsiveness reported in previous empirical studies and prior experience by domain experts suggests that targeted promotions might boost profitability between 15 % and 128 % relative to an undifferentiated standard campaign.

Using workplace population statistics to understand retail store performance

We explore the value of recently released workplace geographies and accompanying census-based workplace zone statistics (WZS) and an associated classification of workplace zones (COWZ). We consider how these data could support retailers in their operational and strategic decision-making, including the evaluation of retail demand and retail store performance in localities where trade is driven by non-residential demand. In collaboration with major UK grocery retailer The Co-operative Group we explore the relationship between workplace population composition and store trading characteristics using a series of case study stores within Inner London. We use empirical store trading data to identify store and product category level temporal sales fluctuations attributable to workplace populations. We also use census-derived flow data to identify the spatial origins of workplace population inflow. We identify that store performance exhibits characteristics attributable to demand driven by these populations. We conclude that workplace population geographies, WZS and the COWZ afford considerable potential for understanding drivers of store performance, observed store trading patterns and evaluation of retail store performance. We suggest that the next step is to build these populations and their micro geography spatial and temporal characteristics into predictive models and evaluate their potential for store performance evaluation and location-based store and network decision-making within this sector.

Cultural Embeddedness of Products

This paper develops a measurement of culture on the product category level, called the cultural embeddedness of products (CEP) scale, and progresses the scale in accordance with standard procedures. It defines CEP as the degree to which a product is connected with ethnic/national culture. The centrality of national/ethnic identity and culture, and its meanings for individuals, lead us to propose CEP as predictive of consumer attitudes and intentions. In particular, we posit that CEP plays a role for local products and potential brands, similar to that played by perceived brand globalness for global brands. We validate a two-dimensional CEP scale in two cultures – American and Norwegian – and find that the scale exhibits good psychometric qualities in both. We also present the particularly consistent effects of the ethnic identity relevance dimension of CEP on attitudes and purchase intentions through perceived product quality. The paper concludes with a discussion of the implications for marketing research theory and practice.

The effects of price, popularity, and technological sophistication on mobile handset replacement and unit lifetime

Modeling the sales and replacements of technology products is typically carried out at the aggregate product category level. However, with maturing markets and especially with high-technology products, the ever-increasing variety of differentiating product features calls for more detailed analysis. This article presents evidence on the effect of price, popularity, and technological sophistication on unit replacement and lifetimes of mobile handsets. The analysis is conducted with a unique device model specific dataset from the Finnish market, with monthly mobile handset unit sales from 2003 to 2009 and annual installed bases from 2005 to 2012. The results show that median unit lifetimes decreased during the second half of the study period, indicating a structural change in the mobile handset market. Furthermore, handset models with higher technological sophistication were shown to have explanatory power on unit lifetimes. During the first half of the study period, more popular handset models were also associated with longer unit lifetimes and models with complex flip design with shorter lifetimes.