Sources of Variability in OTC Sales Data

There are many non-disease factors that influence the level of sales of a given OTC product or product category. Sources of variability include day of week, season, holidays, severe weather, and promotions.

For many products and product categories, the daily sales exhibit day-of-week effects; that is, they vary by day of the week (Figure 22.3). For example, abuse of dextromethorphan-containing cough syrups is a well-known phenomenon (Murray and Brewerton, 1993), and purchases for the purpose of abuse are likely to reflect the opportunity to buy the product (e.g., store hours), which varies by day of week. In general, products with uses other than treatment of the symptoms of acute infectious illnesses exhibit day-of-week effects.

In addition to day-of-week effects, sales of some products exhibit seasonal variation (Figure 22.4). Sales are higher in winter because there is a higher level of infectious respiratory and gastrointestinal illnesses in winter. Certain allergens are also at their highest airborne concentrations at particular times of the year and cause seasonal variations in sales of OTC allergy medications (Magruder, 2003).

Besides day of week and season, holidays and severe weather, such as major snow storms, affect OTC sales. Specifically, these events cause decreases in sales that can be dramatic (e.g., there a steep decline in sales on December 25 in Figure 22.4). Oftentimes, the decrease in sales is associated with higher-than-normal sales before or after the holiday or weather event.

figure 22.3 Day of week effect in OTCsales data.

[■ Unprompted sales ■ All sales figure 22.3 Day of week effect in OTCsales data.

figure 22.4 Seasonal and holiday effects in 2.5 years of OTC sales data.Large increases of sales occur in colder months of the year and when schools are in session. The large peak in December 2003 and January 2004 is due to a relatively severe influenza outbreak. Significant dips in sales occur on Christmas, Easter, and Thanksgiving annually.

figure 22.4 Seasonal and holiday effects in 2.5 years of OTC sales data.Large increases of sales occur in colder months of the year and when schools are in session. The large peak in December 2003 and January 2004 is due to a relatively severe influenza outbreak. Significant dips in sales occur on Christmas, Easter, and Thanksgiving annually.

These events are rare, however. Sales typically drop significantly on only three holidays per year, when many stores are closed or have reduced hours. In the United States, Christmas Day has the lowest counts (approximately one-tenth of usual). The drop in sales is less dramatic on Thanksgiving and Easter.

As we have discussed, promotions have the potential to increase sales, although as Wagner et al. (2003) note, the retail industry is aware that promotions, for the most part, shift sales from one product to another within a product category; thus, the overall effect on many categories is negligible.

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