EFFECTIVE NEW PRODUCT DECISIONS FOR SUPERMARKETS

Current methods by which supermarkets decide which new products to stock are reviewed. Certain limitations of these subjective and ad hoc procedures are suggested and an alternative approach based on a screening technique is developed. The parameters of this method are shown to depend explicitly upon the observed attributes of past successful products and the opportunity costs associated with the decision of the supermarket buyer. It is demonstrated how the structure of the problem cold lead naturally to its formulation in terms of a modified form of classificatory analaysis. The value and economy of this approach are illustrated and discussed.