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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Editor-in-Chief
Dr. Arindam Chaudhuri
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BOOTH SCHOOL OF BUSINESS
The Geography of Brands
Professor Sanjay K. Dhar and Professor Jean-Pierre Dube of booth school of business believe that analysing brand performance across markets rather than simply over time may be a more fruitful approach
Issue Date - 17/11/2011
 
Future Research

The idea behind this study is not to provide answers, but rather to suggest several potential directions for new research based on descriptive findings.

So far, as geography leads to different conclusions regarding the effectiveness of marketing variables, it could suggest that we still have much to learn.

In a follow-up study titled Market Structure and the Geographic Distribution of Brand Shares in Consumer Package Goods Industries, we explore some of the potential underlying economic forces related to branding and brand advertising that generated these striking patterns. Geographic data was utilised to document a strong relationship between market shares and advertising across geographic areas. This finding challenges the results of prior research based on single-market time series data that routinely provided results favouring promotional tactics, such as price-cutting, over advertising strategies et al.

In the geographic dimension, there is very little correlation between promotional activity and brand market shares, suggesting that promotions only have short-term effects. Advertising appears to have longer-lasting effects, possibly through its ability to build a lasting brand, goodwill, stock and to bolster brand perceptions within a market.

In two industries, ground coffee and mayonnaise, we find evidence of a strong, early-mover effect. For the top two brands in each market, controlling for the identity of the first entrant in each geographic market captures more than 50% of the geographic variation in market shares. This result is particularly striking in the coffee category, where brands were rolled out as early as the mid 1900s. The early-entry effect also explains a large component of the advertising variation across markets.

We also try to examine several alternative explanations for the underlying sources of the geographic patterns. In particular, we look at proximity to production facilities (i.e., potential cost advantages), relationships with large retailers, and even local parent company effects. However, none of these alternative sources appears to explain the geographic variation in brand shares.

We hope that future research will focus on broader marketing databases spanning wider geographic scope and longer time horizons. Experimenting with cross-sectional geographic data and contrasting findings with single market time-series data may be a novel way to advance current knowledge about marketing effectiveness. Ultimately, establishing theories to understand the patterns documented in the study should be a fruitful new research area for quantitative marketers.
 

Amir Moin           
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