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Market share modeling within a switching regression framework

Author

Listed:
  • Lau, K.
  • Kagan, A.
  • Post, G. V.

Abstract

Marketers often need to analyze and predict market share for a brand or a firm. These predictions can be based on product attributes and marketing variables. Two analytical techniques have been shown to be better at this task than other models: Multinomial Logit (MNL) and the Multiplicative Competitive Interaction (MCI) model. This study shows that the MNL and MCI models can be derived from a common foundation. It also extends the MNL model by integrating it with switching regression techniques. This new model, switching multinomial logit (SMNL), provides several theoretical advantages over both the basic MCI and MNL models. With a sample data set, the SMNL model outperforms the simple MNL model with a 10% reduction in errors.

Suggested Citation

  • Lau, K. & Kagan, A. & Post, G. V., 1997. "Market share modeling within a switching regression framework," Omega, Elsevier, vol. 25(3), pages 345-353, June.
    • Handle: RePEc:eee:jomega:v:25:y:1997:i:3:p:345-353
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    References listed on IDEAS

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    1. Hausman, Jerry A & Wise, David A, 1978. "A Conditional Probit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Econometrica, Econometric Society, vol. 46(2), pages 403-426, March.
    2. Huffman, Wallace E., 1988. "An Econometric Methodology for Multiple-Output Agricultural Technology: An Application of Endogenous Switching Models," Staff General Research Papers Archive 11003, Iowa State University, Department of Economics.
    3. Masao Nakanishi & Lee G. Cooper, 1982. "Technical Note—Simplified Estimation Procedures for MCI Models," Marketing Science, INFORMS, vol. 1(3), pages 314-322.
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    Cited by:

    1. Andrade, Xavier & Guimarães, Luís & Figueira, Gonçalo, 2021. "Product line selection of fast-moving consumer goods," Omega, Elsevier, vol. 102(C).

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