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Bart J. Bronnenberg, Sanjay K. Dhar, and Jean-Pierre Dubé
Executive Summary
The authors describe geographic patterns in the market shares of national brands using a large longitudinal scanner database that spans many consumer packaged goods (CPG) categories and U.S. regional markets. For a typical national brand, the magnitude of the geographic variation in market shares, perceived quality levels, and degree of local dominance places in question the concept and relevance of a "national brand." Specifically, the data exhibit several empirical regularities for market shares of national brands in CPG categories. These are geographic dispersion in the levels of market shares and the identities of the local share leaders, persistent share variation over time within a market, and spatial dependence that makes nearby markets appear similar in terms of their market share distributions. Overall, the surprisingly large amount of information contained in the geographic dimension of these CPG categories might challenge some of the general knowledge based typically on single-market time-series analysis. In particular, two potentially controversial implications of a single-market focus emerge. First, a single-market focus effectively omits the cross-market dimension of CPG industries, which contains the largest component of variation in the market shares of national CPG brands. Second, a major goal of quantitative research in marketing is to determine the marginal effects of firms’ marketing investments. To the extent that cross-market variation in shares contains information about the long-term (or steady-state) outcomes of marketing investments, the use of geographic variation in shares could improve the accuracy and precision of estimated marginal effects of marketing variables.
In addition to documenting striking new empirical regularities in geographic data, the data description points toward several worthwhile topics for debate and further research using CPG data. For example, the description suggests that geographic data may present a novel new source of long-term marketing data. Furthermore, to the extent that the geographical differences in market shares for national brands are persistent, local differences in branding may constitute a long-term outcome in the CPG industry.
Biography
Bart J. Bronnenberg is Professor of Marketing in the Anderson School of Management at University of California, Los Angeles. He received his PhD from INSEAD (France) and his BA from Twente University (the Netherlands). He has published in several peer-reviewed journals, including Marketing Science, Management Science, Journal of Marketing Research, Journal of Consumer Research, and International Journal of Research in Marketing. His areas of research interest include multimarket aspects of firm strategy, new products, sustainability of local advantages, and long-term effectiveness of branding. Bart Bronnenberg has won the John D.C. Little Award for best paper in Marketing Science/Management Science in 2004, the Paul Green Award for best paper in the Journal of Marketing Research in 2003, and the International Journal of Research in Marketing best-paper award in 2003.
Sanjay K. Dhar is James H. Lorie Professor of Marketing in the Graduate School of Business at the University of Chicago, where he has also been a faculty member since 1992. Professor Dhar’s research and teaching focuses on strategic marketing management, advanced marketing strategy, brand management, new product development, pricing strategy, promotion strategy, retail price advertising strategies, retail management best practices, consumer and retail sales promotions, trade promotions, private labels, category management, loyalty reward programs, everyday low pricing, assortment management, purchase incidence, and brand choice. He is on the editorial board of Marketing Science, Quantitative Marketing and Economics, International Journal of Research in Marketing, and Review of Marketing Science,and he also serves as a reviewer for several other journals in marketing. He has published several articles in Marketing Science, Journal of Marketing Research, Journal of Marketing, Journal of Retailing, Management Science, Marketing Letters, Quantitative Marketing and Economics, and Pricing Theory and Practice.
Jean-Pierre Dubé is Professor of Marketing and Neubauer Faculty Fellow in the Graduate School of Business at the University of Chicago, where he has been a faculty member since 2000. Professor Dubé’s research applies economic models of empirical industrial organization to study marketing problems. His current areas of research include the competitive dynamics associated with pricing and advertising, switching costs, price discrimination, industrial market structure for branded goods, and Internet marketing. He is on the editorial board of Marketing Science, Product and Operations Management, and Recherche et Application en Marketing. He has also served as a reviewer for several journals in marketing and economics. He has published several articles in Journal of Marketing Research, Management Science, Marketing Science, Marketing Letters, and Quantitative Marketing and Economics. |