Understanding Consumer Reactions to Assortment Unavailability

consider this finding when they attempt to decrease their OOS problems and pay special
attention to the segment of high-equity brands in hedonic categories. In this segment, retailers
should try to minimize OOS occurrences, for example, by allocating more shelf space to such
items at the expense of items in the low-equity brands, utilitarian segment. Furthermore, retailers
should consider minimizing the breadth of their assortment in utilitarian product groups and
increase the number of items per brand for high-equity brands.
We also believe that consumer OOS reactions provide insights into the short-term
reactions of consumers in the case of permanent unavailability. If retailers notice many
complaints or a strong drop in product group sales when certain items in certain product groups
are OOS, they should be careful about permanently delisting those items.
2.7.2 Implications for manufacturers
Table 2.9 also includes guidelines for manufacturers. If a manufacturer faces high OOS levels for
its own brand, it will lose sales, even if the brand is a high-equity brand in a hedonic product
group. Therefore, all manufacturers should try to help retailers lower OOS levels, especially
because research shows that OOS levels between 5% and 10% are common. Particularly,
manufacturers of low-equity brands in utilitarian categories can suffer severe damage of OOS
occurrences; in many cases, consumers will simply switch to items of another brand. For these
manufacturers the necessity to lower OOS levels is relatively more important than for other
manufacturers because it may not be a high priority for the retailer.
The objectives for retailers and manufacturers with regard to OOS management often are
contradictory. For retailers, item switching does not present a significant problem, because
retailers tend to focus instead on OOS situations in which consumers do not buy a substitute.
Therefore, retailers will focus on lowering OOS among brands and product groups for which the
OOS hurts the most. Particularly, these are the high-equity brands in the hedonic product groups.
In addition, many manufacturers of low-equity brands will probably not have state-of-the-art
knowledge in the category and supply chain management areas. These manufacturers probably
will not be first in line to cooperate with retailers to solve the OOS problem. Therefore, we
recommend that manufacturers of low-equity brands focus on holding their shelf space, for
example, through short-term–oriented trade allowances. In contrast, manufacturers of high-
equity brands could attempt to remedy retailers’ OOS problems by participating in category
management projects that focus on reducing OOS levels. In doing so, these high-equity brand
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