Distribution, the metric commonly used for tracking product availability, is usually measured in numeric and weighted terms. It may be weighted in either volume or value.
Numeric Distribution is the percentage of stores handling product.
Weighted Distribution is the percentage of stores handling product weighted by product category store sales. This is equal to share of category sales by handlers.
Let’s take the example presented in Exhibit 29.13 to understand the concepts of numeric distribution and weighted distribution.
In this example, Brand X is carried by three shops (handlers): A, B and C. The numeric distribution of Brand X is calculated by dividing the number of shops carrying the brand (which is 3) by the total number of available shops (which is 4), resulting in a numeric distribution of 75% (3 out of 4).
The weighted distribution of Brand X is determined by considering the total weight of the handlers (A, B and C) in terms of category sales. In the given example, the weighted distribution of Brand X is equal to 50%. This value is derived from adding up the category sales weights of each handler (5 + 20 + 25).
A brand’s weighted distribution can be defined as the brand’s handlers’ trade share of category sales. It corresponds to the handlers’ contribution to total category sales.
Unless otherwise specified, distribution is weighted in terms of category value sales. Defined as a percentage of where money is spent on the product category, it reflects the quality of distribution.
When comparing brand X and brand Z, it can be observed that brand X has a lower weighted distribution (50%) than its numeric distribution (75%). This suggests that the quality of brand X’s distribution is relatively weak. On the other hand, brand Z has a numeric distribution of 50% and a weighted distribution of 70%, indicating that it is handled by stores that make a more significant contribution to category sales.
By analysing these metrics, marketers and researchers can gain insights into the market presence and performance of a brand, considering both the number of shops carrying the brand and the sales weight associated with those shops.
Whereas weighting of stores on category sales is the norm, for certain categories, it is advisable to assign weights based on ACV (i.e., the sales value of all categories) or based on a collection of related categories. This practice is particularly beneficial for small, new, or growing categories that have a limited number of brands. For such categories, ACV weighted distribution is a better indicator of the quality of distribution.
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