How Point-of-Sale Marketing Mix Impacts National-Brand Purchase Shares

Purchase shares of major national-brands in consumer packaged-goods industries vary substantially across stores, both between geographic markets and across stores within markets. This paper measures the extent to which the variation in national-brand purchase shares depends on four store-specific marketing mix factors: prices, assortment shares, features and displays. These variables are traditionally targets of influence of trade marketing by manufacturers through various mechanisms. We do not directly measure the impact of trade (or " push ") marketing because we do not observe the actual arrangements between manufacturers and retailers. Rather, we measure the impact that the actual prices, assortment shares, features and displays in a supermarket have on the store-level market shares of the top-two national brands across 6 product categories. We do this by first demonstrating the extent to which purchase shares of the top two national brands across 6 different categories vary across markets, accounts (defined as chain-market interactions) and stores: market-level variation accounts for almost 55% of the variation in purchase shares across stores, while account-level and store-level variation explain an additional 20% and 9% of the variation, respectively. We then measure the extent to which assortment, pricing, feature and display activities affect the purchase shares of the top national brands. We find that prices and assortment shares are the two most-important push factors in determining a brand's purchase share: changes from the 10 th percentile to the 90 th percentile (which we call the " reasonable range ") would, on average, cause a brand to lose 11.7% of the market for price, and the brand to gain 6.6% of the market for assortment share. We then measure the extent to which the variation in top national-brand purchase shares is explained by these four factors. Using two different calculations that bound the impact of the push factors and a novel point-estimate model, we find that, on average, approximately 42% of the variation in national-brand purchase shares can be attributed to these four factors. Despite the fact that these four factors have such a large impact on purchase shares, we note that it would be difficult for a number 2 brand to " push " its way to being the top brand in the category. These results demonstrate the potential importance of trade marketing on a brand's purchase shares.