On the Prediction Power of Market Share Attraction Models

Naert, Ph.; Weverbergh, Marcel

doi:10.1177/002224378101800202

Cited by 75 publications

(23 citation statements)

References 11 publications

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“…The basic justification for some of these specifications is rooted in what has been known as Kotler's fundamental theorem (on market share) and the axiomatic approach in the Bell-Keeney-Little market share theorem (Bell, Keeney, and Little 1975). Since the MCI and the MNL models imply immediately that each brand's market share is nonnegative and the sum of market shares of all brands is unity, both specifications satisfy the so-called logical-consistency requirements (Naert and Bultez 1973). While these two models have not always resulted in superior performance in terms of predictive accuracy in comparison to the other models, it has been argued that they nevertheless yield more meaningful interpretations regarding market-share elasticities and sales-volumes elasticities, notions which managers may find most useful.…”

Section: Introductionmentioning

confidence: 99%

Multinomial Logit Market Share Models: Equilibrium Characteristics and Strategic Implications

Basuroy

Nguyen

1998

Management Science

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We specify and analyze the conditions under which the MNL market share models are appropriate for equilibrium analysis. Our results show that a linear price response function as is often used in empirical research, in conjunction with the typical concavity assumed in a large range of marketing response functions, would yield an interior equilibrium solution. We then consider the optimal reactions on pricing and marketing spending to entry and potential market expansion. In the context of the MNL models, we demonstrate that the entry of a new brand evokes a decrease in the equilibrium prices of the existing brands as a defensive reaction. This is true in both an expanding market as well as a fixed market. However, while new entry into a fixed market would trigger the incumbents to lower the marketing expenditure, we show that firms tend to raise marketing activities as they experience market expansion. Consequently, there exist distinct possibilities that marketing efforts for the existing brands increase in view of entry in an expanding market. Further managerial and marketing implications for endogeneity of the number of firms are explored.MNL Market Attraction Models, Equilibrium Analysis, Entry and Market Expansion, Competitive Pricing and Advertising, Free-Entry Equilibrium

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Section: Introductionmentioning

confidence: 99%

Multinomial Logit Market Share Models: Equilibrium Characteristics and Strategic Implications

Basuroy

Nguyen

1998

Management Science

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“…The few exceptions are the recent comparison of models by Naert and Weverbergh (1981) and two earlier studies by Weiss (1969) and Rao (1972). As Naert and Weverbergh note, however, only tentative answers to questions about the relative performance of different models are available and further empirical work addressing this important issue is necessary.…”

Section: Some Intermediate Level Of Parameterization Be Used?mentioning

confidence: 98%

“…Though models with brand-specific response parameters are most meaningful for decision makers, Naert and Weverbergh (1981) have found that constraining the parameter values improves the predictive performance of market share models.…”

Section: Some Intermediate Level Of Parameterization Be Used?mentioning

confidence: 99%

A Comparison of Market Share Models and Estimation Procedures

Ghosh¹,

Neslin²,

Shoemaker³

1984

Journal of Marketing Research

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“…We choose to analyze market shares and to measure the effectiveness of marketing instruments of different brands using the familiar market share attraction model (Bronnenberg, Mahajan, & Vanhonacker, 2000;Cooper & Nakanishi, 1988;Leeflang & Reuyl, 1984;Naert & Weverbergh, 1981). An advantage of using market shares is that these are in general not influenced by category expansion or contraction.…”

Section: Attraction Modelmentioning

confidence: 99%