COMPETITIVE-COMPONENT ANALYSIS - A NEW APPROACH TO CALIBRATING ASYMMETRIC MARKET-SHARE MODELS

Managers are unlikely to keep current with advanced developments in ma rket-response analysis, and technical analysts often lack the marketpl ace knowledge of the many product categories they must track through s yndicated data; this is a recipe for bad decisions. The authors presen t methods based on three-mode factor analysis and multivariate regress ion that can help both analysts and managers make better decisions reg arding whether UPCs should be aggregated into brand units and, if so, how should the aggregation be done; which marketing instruments to tra ck; and how to disentangle correlated promotional strategies. The prac ticality of this approach is demonstrated by an application to UPC-lev el data (25 UPCs, seven marketing instruments, and 156 weeks). In this example, to aggregate UPCs within a manufacturer into brand units wou ld distort the relations between the marketing instruments and market responses. A multivariate regression from the competitive-component sc ores provides a methodologically sound and practical method for calibr ating market response in such cases.