Equations need to be viewed in Intenet Explorer. Symbol fonts are not available in Firefox.

Market-Share Analysis
Evaluating Competitive Marketing Effectiveness

Lee G. Cooper
Anderson Graduate School of Management
University of California, Los Angeles

Masao Nakanishi
School of Business Administration
Kwansei Gakuin University
Nishinomiya-shi, JAPAN

Originally published by Kluwer Academic Publishers
Boston Dordrecht London

International Series in Quantitative Marketing

Series Editor:
Jehoshua Eliashberg
The Wharton School
University of Pennsylvania
Philadelphia, Pennsylvania, U.S.A.

Library of Congress Cataloging-in-Publication Data

Cooper, Lee G.
Market-share analysis: evaluating competitive marketing effectiveness / Lee G. Cooper, Masao Nakanishi.
p. cm. - - (International series in quantitative marketing)
Bibliography: p.
Bound version includes index.
ISBN 0-89838-278-5
1. Marketing - - Decision making - - Mathematical models.
I. Nakanishi, Masao, 1936- . II. Title. III. Series.
HF5415. 135.C66 1988
658.8`02 - - dc 19 88-12092
CIP

Original Copyright 1988 by Kluwer Academic Publishers

Copyright 1999 Lee G. Cooper

United States of America

Preface to the Web Edition

This Web Edition was created in June of 1999. We thank Elizabeth Korb for her assistance in creating the HTML version of this book. The HTML version was created from the original TeX code using software from TeX2HTML.com. The rest of this document contains the complete text of the original version that received the Outstanding Contribution Award by the Japan Society for Commercial Sciences in 1989, the first text published outside Japan to be honored.

Foreword

In April 1971, Los Angeles and its satellite cities were treated to one of its least interesting and least publicized elections in years. Nothing seemed to be hotly contested. A few Los Angeles city councilmen were up for reelection as were some members of the Board of Education and the Board of Trustees of the Community Colleges.
- Nakanishi, Cooper and Kassarjian [1974]

Our colleague, Professor Harold H. Kassarjian, ran for one of the seats on the Board of Trustees and received 17,286 votes. While he lost the election, he had collected the data which he felt characterized voting in such low-involvement cases. He asked us to join him in writing a follow-up to a study of a similar election which had been published the previous fall in Public Opinion Quarterly. Neither of us was content with the methods and models used in the prior study. Shares are different than other criteria, be they vote shares, market shares or retail stores' shares of customers. Different methods are needed to reflect their special nature. And thus began a research collaboration, running 17 years, so far.

Though our combined research efforts have covered diverse areas of consumer choice behavior, in recent years we came to the realization that our models and analytical methods might be very profitably employed in the analysis of market-share figures for consumer products. So we decided to write a book on market-share analysis which was intended to give not only graduate students in marketing an introduction to the topic but also front-line managers a practical guide to the various stages of analysis.

The latter objective was a bit of a problem. Neither of us had extensive business experience, but once our focus was set we learned rather quickly. We found that so-called optical scanner data (or POS data, as it is called in Japan) were becoming the major data source for market-share figures for many packaged consumer goods. We also found that to be of practical use to front-line managers the data base, the analytical and interpretive models, and the planning process must all be integrated into a comprehensive system of data management and computation.

In the course of writing this book one of the authors undertook a rather ambitious project to develop computer software which is essentially a miniature market information system designed to facilitate market-share analysis, with a special emphasis on the utilization of optical scanner data. We are happy to note that the end product of this project, CASPER, was the Grand Prize Winner of the Ashton-Tate Framework Applications Contest, co-sponsored (and judged) by PC Magazine. The development of CASPER led us to contact many practitioners, and brought us a deeper understanding of what is involved in market-share analysis in business contexts.

We now feel that this book offers front-line managers a combination of good theory and implementable models, as well as a prototype market information system from which real-world systems may be developed. To graduate students this book should be a good reference source for consumer choice models, market-share models, and new techniques in competitive mapping. In addition, CASPER may be used as a brand-planning game, through which the students may experience the complexities of market response under highly competitive conditions. We tried to give the reader a balanced treatment of the theoretical and the practical. We put much of the mathematical and theoretical material into appendices, so as not to interrupt the flow of ideas. An (*) at the beginning of a section heading signals advanced statistical or theoretical content which may be skipped by those readers who are bent on practical applications.

We thank the many colleagues who have assisted the development of this book. In particular we acknowledge the contributions of Penny Baron, J. Dennis Bender, Gregory S. Carpenter, Carl T. Finkbeiner, Sunil Gupta, Dominique M. Hanssens, Charles F. Hofacker, Barbara E. Kahn, Harold H. Kassarjian, Hotaka Katahira, Robert J. Meyer, David F. Midgley, Yutaka Osawa, Jagmohan S. Raju, Burton E. Swanson and John C. Totten. We appreciate the efforts of the Series Editor, Jehoshua Eliashberg, who along with the reviewers he recruited made valuable suggestions on the first draft of the book.  We are also grateful to Information Resources, Inc. which provided the scanner data used in the coffee-market example in the latter half of this book, to Quaker Oats for a grant which helped get us started with scanner data in 1983, to the Marketing Science Institute which, in 1987, aided in the development of brand-planning software used in Chapter 7, to Beatrice Foods and an anonymous consumer-products firm which provided exposure to and experience with large-scale commercial data, and to an anonymous retailer which aided our understanding of how scanner-based operations affect the organization of retail activities. We acknowledge the financial assistance of Cooper Research Inc. for support in producing the camera-ready version of this manuscript.

Dedication

We dedicate this book to Ann, Joseph and Daniel Cooper, and to Hiroko and Tauto Nakanishi. The support, love and indulgence of our families has made the crucial difference in our efforts. We will always remember and be thankful.

August 1988 Lee G. Cooper
Santa Monica, California, USA

Masao Nakanishi
Nishinomiya-shi, JAPAN