Retail distribution evaluation in brand-level sales response models

The effectiveness of a product’s distribution network in retail stores is an important consideration for marketing managers. An effective distribution network typically covers a large number of stores in the geographic area of a market and establishes a continuous presence in the top-selling outlets of a product category at the same time. This study proposes a semiparametric, brand-level version of the SCAN*PRO sales model, to evaluate the impact of retail distribution changes on sales. The model is estimated using the iteratively reweighted least squares method and provides the following outputs: (i) least squares coefficient estimates for the price and promotional drivers in the model specification and (ii) two-dimensional plots of the nonmonotonic relationship between the weighted distribution and sales. The proposed model can be estimated with commonly available retail scanning data and is demonstrated using three laundry detergent brands from The Netherlands.