BRAND SWITCHING AND MARKET PARTITIONING: AN EMPIRICAL STUDY OF BRAND COMPETITION
Abstract
Insight into the competitive environment and its inherent dynamic properties is of primary importance in designing successful marketing strategies. Little attention has, however, been devoted to this issue in the marketing literature. The main objective of this research was to illustrate the potential of a stochastic brand choice model in characterizing the nature and magnitude of brand competition within frequently purchased, low priced consumer product categories. The Hendry partitioning methodology and its underlying premises concerning aggregate switching were relied on to assess the competitive structure of a market. The fundamental axioms of the HendroDynamics were validated empirically and compared to those of alternative random choice models suggested in the literature. The partitioning algorithm was detailed and illustrated using switching patterns obtained from purchase recall data for four different paper products. Some very interesting insights into the competitive relationships among the various brands were obtained. These results were validated subsequently against the outcomes of two pure empirical procedures. First, joint space configurations were generated internally from rank-order preference data. The resulting market structures were cross-validated against the hierarchical preference structure obtained from the partitioning analysis. Even though the Euclidean distance patterns showed some consistencies with observed switching, the nature or dimensionality of the competition was not captured in the configurations. Subsequently, the partitioning results were validated against preference hierarchies obtained from a clustering procedure. Here, the heterogeneity in actual choice structure across consumers could be observed. Some consistency was noted but the aggregate insights were not fully captured. Finally, some immediate managerial implications especially relating to new product introduction and cannibalization were outlined.
Degree
Ph.D.
Subject Area
Marketing
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