A comparative study of market share models using disaggregate data

V. Kumar and Timothy B. Heath
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V. Kumar: College of Business Administration - University of Houston
Timothy B. Heath: Graduate School of Business - PITT - University of Pittsburgh - Pennsylvania Commonwealth System of Higher Education (PCSHE)

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Abstract: Prior research assessing the predictive validity of alternate market share models produced conflicting results and often found that econometric models performed worse than naive extrapolations. However, contributors to IJF's recent issue on market share models suggested that such models are often misspecified, in part because they exclude promotional variables and are estimated on aggregate data. Thus, we used weekly scanner data to assess full, reduced, and naive forms of linear, multiplicative, and attraction specifications across different levels of parameterization. Consistent with specification-based arguments, (1) econometric models were superior to naive models, (2) GLS estimates of attraction models were superior when models were fully specified, (3) OLS estimates of linear models were superior when models omitted important variables, and (4) attraction models predicted best overall. Moreover, in general, unconstrained models yielded superior forecasts relative to constrained models because brand-specific parameters were heterogeneous for the product category tested.

Keywords: empirical study; evaluating forecast accuracy; market share models; scanner data; theoretical explanation (search for similar items in EconPapers)
Date: 1990-07
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Citations: View citations in EconPapers (14)

Published in International Journal of Forecasting, 1990, vol. 6, issue 2, p. 163-174. ⟨10.1016/0169-2070(90)90002-S⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00670544

DOI: 10.1016/0169-2070(90)90002-S

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