Path Dependencies and the Long-term Effects of Routinized Marketing Decisions

The purpose of this paper is to discuss a simulation of marketing budgeting rules that is based on a simplified version of the market share attraction model. The budgeting rules are roughly equivalent to those that may be used in practice. The simulation illustrates the concept of path dependence in dynamic marketing systems and shows how it might result from decision rules potentially applied by marketers and retailers. Path dependence results from positive feedback in dynamic systems that imparts momentum to market choices. Where the potential for path dependence exists, there are implications for defining and measuring long-term effects of marketing decisions in a way that is meaningful to managers and researchers. In the simulations presented we show that limited retails assortment may contribute to path dependence when firms use either percentage-of-revenue rules or "market learning" experiments to set budgets. While other budgeting procedures (e.g., matching competition) may stabilize market share, this stability in the share dimension comes at the cost of instability for budgets and profits

Product availability and market share in an oligopolistic market: the Dutch detergent market

The nonlinear distribution and market share curve as well as the push and pull model developed by Farris et at. (1989) have been investigated in the Dutch detergent market. The total detergent market as well as some of its market segments were studied: the data supported the push and pull model. The data also revealed that the detergent market is characterized by a specific market share configuration: extensions of the top brands quickly gain maximum distribution which might explain their higher market share. Implications for marketing management and marketing theory are discussed