The allocation of scarce shelf space among competing products is a central problem in retailing. Space allocation affects store profitability through both the demand function, where both main and cross space elasticities have to be considered, and through the cost function (procurement, carrying and out-of-stock costs). A model is developed which uniquely incorporates both effects. A case study is used to estimate the parameters and the problem is solved within a geometrical programming framework. An extensive comparison with alternative procedures suggests this general model leads to significantly different allocation rules and superior profit performance.marketing: retailing, programming: geometric
The marketing problemResearch shows that the roots of a marketing failure lie in two areas. First, as Baker[4], King[5] and other experts observed, marketers have generally made the mistake of seeing the subject as a functional discipline rather than an integrative business process. Marketing directors have sought to make marketing decisions rather than share responsibility for satisfying customers with cross-functional teams. Unfortunately, the only decisions where marketing had sole responsibility tended to be tactical: promotions, line extensions and superficial positioning policies. The real strategic decisions which do determine
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