The Influence of Brand Market Share on Price Promotional Brand Switching

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The Influence of Brand Market Share

on Price Promotional Brand Switching

A Study in the US Canned Tuna Market

Jorke Braaksma

Master Thesis MSc. Marketing Intelligence First Supervisor: E. Kooge

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Introduc-on (1)

•  Price promo-ons are one of the biggest drivers of increasing sales

•  Law of Demand

•  Where do these ‘extra’ sales come from?

•  Period 2002 – 2004: Studies based on store data

•  Decomposi-on based on 3 main components:

- Category expansion eﬀects - Cross--me eﬀects

- Brand switching eﬀects

Van Heerde, H. J., Gupta, S., & Wittink, D. R. (2003). Is 75% of the sales promotion bump due to brand switching? No, only 33% is. Journal of Marketing Research, 40(4), 481-491.

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Introduc-on (2)

›  Brand switching, on average 1/3. But does this diﬀer for diﬀerent brands? ›  Higher -er – Lower -er brands (BlaVberg and Wisniewski, 1989) ›  Double Jeopardy Law: brands with higher market share have more customers who also buy more o[en (low market share brands are punished twice) ›  Byron Sharp (2010) contradicts this to a certain extent. The loyalty part (customers of high market share brands also buy more o[en) is only slightly true. These customers are only slightly more loyal. Not as clearly as the Double Jeopardy Law claims. ›  But how does this loyalty part turns out in combina-on with price promo8ons?

BlaVberg, R. C., & Wisniewski, K. J. (1989). Price-induced paVerns of compe--on. Marke&ng science, 8(4), 291-309. Sharp, B. (2010). How Brands Grow. South Melbourne, Australia: Oxford University Press Australia.

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Data

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Store data on 5 canned tuna brands in the U.S Jewel

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Methodology (Standard decomposi-on)

›  Uniﬁed framework: •  CST = Total category sales •  OBS = Own brand sales •  CBS = Cross brand sales •  CSW = Category sales without the promoted week (t) ›  CST = OBS + CBS + CSW ›  CST = 300 + (-150) + (-130) ›  CST = 20 ›  OBS = CST – CBS – CSW ›  300 = 20 +150 + 130

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Methodology (3)

›  Transforming propor-on to absolute values:

•  (Base sales * (PI(OBS) * 0.1) * Brand switching propor-on)

•  For store-level a store ra8o is added (formula -mes store ra-o)

›  How to measure inﬂuence of brand market share on brand switching?

•  Linear regression

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