About AMA

Executive Summary
When retailers make product assortment changes by eliminating certain stockkeeping units (SKUs), how does this affect sales of individual brands? This is the main question the authors address in this article. Previous research on product assortment changes has primarily focused on their impact at the store and product category levels. Although a category- or store-level analysis is useful for retailers, a brand-level analysis also bears direct relevance to both retailers and manufacturers. Using data from an online retailer that implemented a permanent systemwide SKU reduction program, the authors investigate how the program affected various components of purchase behavior for individual brands. They find substantial variations in the SKU reduction effects across brands, categories, and consumers. They explore possible drivers for these differences and find that higher market share, higher priced, and more frequently promoted brands tend to gain share and reduction in the number of sizes, reduction in the number of SKUs, and change in SKU share in the category are important in affecting change in a brand's purchase share after the SKU reduction. They also find that SKU reductions lead to increases in category purchase incidence and quantity for highly state-dependent consumers and frequent buyers but lead to decreases in category purchase and quantity for mildly state-dependent consumers and infrequent buyers. In addition, SKU reductions tend to cause more changes in brand choice probabilities among consumers of lower state dependence and higher price and promotion sensitivity. The findings are of importance both to retailers seeking to make product assortment changes and to manufacturers affected by them.

Biography
Jie Zhang is Assistant Professor of Marketing in the Robert H. Smith School of Business at the University of Maryland. She holds a PhD from the Kellogg Graduate School of Management at Northwestern University. Her general research interest is to apply econometric and statistical models to study consumers' purchase behavior and response to various promotion programs and then to design innovative decision support tools for marketers on the basis of these models. She is particularly interested in their applications in the Internet shopping environment. Her recent research projects focus on online promotion customizations and shopping behavior and various topics that aim to improve decision making for retail management in general (e.g., category management, cross-category models, the impact of SKU reductions, visual attention to feature advertisements). Her research has won the Procter & Gamble Marketing Innovation Research Award and been sponsored by the Marketing Science Institute. She has published articles in leading marketing journals, such as Marketing Science and Journal of Marketing Research.

Aradhna Krishna is Isadore and Leon Winkelman Professor of Marketing in the Ross School of Business at the University of Michigan. She received her PhD from New York University in 1989; her MBA from the Indian Institute of Management, Ahmedabad, in 1984; and her BA in Economics from Delhi University in 1979. Besides the Ross School of Business, she has also spent time at Columbia University, New York University, and the National University of Singapore. Her research focuses on pricing, managing promotions, packaging, and branding. Her research methodology combines experimental techniques with quantitative modeling. She has had numerous articles published in Journal of Marketing Research, Marketing Science, Journal of Consumer Research, Journal of Economic Theory, Journal of Consumer Psychology, Management Science, Journal of Retailing, Journal of Marketing, Journal of Experimental Psychology, and Harvard Business Review. Her work has been cited on National Public Radio, The New York Times, The Wall Street Journal, and other publications. She is on the editorial boards of Journal of Marketing Research, Marketing Science, and Marketing Letters.