Sales and Distribution — Number of Items Stocked

Consider the following example. Flat screen TVs are available in 90% of stores (numeric distribution) carrying consumer durables. There are only three brands in the market:

  • Panasonic is in 60% of stores;
  • Philips is in 40%;
  • Sharp is in 80%.

For simplicity, suppose there are exactly 100 stores. In which case 60 would carry Panasonic, 40 Philips and 80 Sharp. This adds to the brands’ distribution count of 180 (60+40+80) over 90 stores. Since only 90 stores carry flat screen TVs, the average store is therefore carrying 2 brands (180/90).

As can be seen from this example, the average number of brands (in category) stocked in stores is the sum of the numeric distribution of the brands divided by the category numeric distribution:

$$\frac{\text{Sum of Brands Distribution}}{\text{Product Category Distribution}}$$

Sum of Brands Distribution: 60 + 40 + 80 =180

Product Category Distribution: 90

Average number of brands = 180/90 = 2

 

Similarly the average number of items stocked in stores:

$$\frac{\text{Sum of Items Distribution}}{\text{Product Category Distribution}}$$

And the average number of a brand’s items stocked in the stores carrying the brand:

$$\frac{\text{Sum of Brand’s Items Distribution}}{\text{Brand Distribution}}$$

Example: A brand has 80% numeric distribution, and its three items have distribution of 80%, 50%, 70%. The average number of a brand’s items stocked in stores carrying the brand is computed as follows:

Brand distribution = 80% (width of distribution)

Item distribution (3 of) = 80%, 50%, 70%

Sum of the brand’s items distribution = 80 + 50 + 70 = 200

Average number of items stocked = 200/80 = 2.5 (depth of distribution)

 

Example: Flat screen TVs are available in 90% of stores (numeric distribution) carrying consumer durables. There are only two brands in this market — Panasonic and Sharp. Based on the distribution of these brands and their individual models, as given in Exhibit 30.3, we can compute the following:

  • Average number of flat screen TVs stocked per store;
  • Average number of Sharp TVs stocked where Sharp is listed;
  • Average number of Panasonic TVs stocked where Panasonic is listed;
  • Efficiency rate for the two brands.

Average number of items stocked per store = (300 + 320)/90 = 6.9

Average number of Panasonic TVs stocked where brand is listed: 300/60 = 5,

Panasonic’s efficiency rate: 5/6= 80.3%,


Exhibit 30.3   Numeric distribution of Panasonic and Sharp flat screen TVs.

Panasonic’s share of items: 300/620 = 48.4%,

Average number of Sharp TVs stocked where brand is listed: 320/80 = 4,

Sharp’s efficiency rate: 4/8 = 50%,

Sharp’s share of items: 320/620 = 51.6%.


One conclusion from this fictitious example, is that Sharp has greater width of distribution whereas Panasonic has greater depth. It appears that Sharp has greater success in getting listed, whereas Panasonic is better at securing depth where listed.

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