By Lee G. Cooper
E-book via Cooper, Lee G., Nakanishi, Masako
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Extra resources for Market-Share Analysis: Evaluating Competitive Marketing Effectiveness
Sample text
A plan can be evaluated against various competitive scenarios. , projit-maximizing) plan. 5 Stage 5: Follow-Up It is critically important that the analyst reviews the performance of the firm's product/brand after marketing plans are put into effect. A careful review of one's plans and actual performance will improve not only future planning but also the techniques for market-share analysis. In doing a follow-up, it is not enough just to look at whether market shares were accurately forecasted. Market shares and consequently actual sales volume differ from the forecasted values for three basic reasons.
MARKET SHARES AND CHOICE PROBABILITIES 43 are positively correlated, E(Si) is greater than 1ri. If the correlation is negative, E(Si) is less than 1ri. Note also that, if cov(ţt, 1I"i) = O(that is, if there is no correlation between the market share and choice probability), then the expected market share and the average choice probability are equal. In other words, in the uncorrelated case the expected value of a brand's market share is equal to its average choice probability (1ri). 4. ,1I"i)/ji.
7. 19) combines the essential elements of interbrand competition. In order to expand a firm's brand sales, one will have to increase either industry sales or the market share for the brand, or both. But one would expect that in many cases the industry sales will be rather inelastic to a single firm's marketing activities. If this were indeed the case, brand sales could 11 Lambin, Naert & Bultez [1975], "Optimal Marketing Behavior in Oligopoly," European Economic Review, 6, 105-28. 12This assumes no systematic competitive reactions.