Econometric Models for Forecasting Market Share
effects of current marketing activity are strong relative to the carryover effects of past marketing activity,
there are enough observations,
the models allow for variation in response for individual brands,
the models are estimated using disaggregate (store-level) data rather than aggregate data,
the data exhibit enough variability, and
competitors’ actions can be forecast with reasonable accuracy.
In most situations the first five conditions can be satisfied. Condition 6 is more difficult to satisfy and is a priority area for further research. If one or more of the conditions are not satisfied then an extrapolation or judgment forecasting method may be more appropriate.
KeywordsBias competitors’ actions conditions disaggregation econometric models explanatory power forecasting accuracy market-share models measurement error model specification naive models precision sample size time-series models
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