MARKET SHARE AND DISTRIBUTION - A GENERALIZATION, A SPECULATION, AND SOME IMPLICATIONS

In this paper we review evidence of a generalized convex cross-section al relationship between retail distribution and unit market share, i.e ., large-share brands have more share points per percentage of distrib ution than small-share brands. The dynamics and structure of distribut ion and share can help explain many phenomena in marketing, including this convex shape: (1) market share is both a cause and an effect of d istribution, and (2) in the typical convenience goods distribution sys tem there are a few large outlets that stock many brands and numerous smaller outlets that stock the leading brands only. Generally, the obs erved cross-sectional ''curve'' relating distribution and share will r eflect the retailers' stocking decisions, not the incremental effect o f distribution on share. However, a logically consistent model of shar e based on (1) and (2),when combined with the assumption of low search loyalty, results in customers being willing to switch from preferred to available brands. A further consequence is that the marginal effect of weighted distribution on share is likely to be increasing, i.e., r esult in convex curves relating distribution and share for a given bra nd. In some cases, and for some measures of distribution, these convex curves have been observed in time-series data for brands that failed and lost distribution over a relatively short period of time. The impl ication is that marketers should monitor distribution carefully, as it is the result of combined effects of brand preference, loyalty, and ' 'push'' programs. With a better understanding of the market share/dist ribution relationship, managers should be in a better position to fore cast marketplace results for a given level of distribution.