Long-Run Stability of Brand Sales Levels

Growth PathsDekimpe, M.; Hanssens, D. · 1995Marketing Science

Topicsmarket evolution·stationarity·long-run marketing effectiveness·market share·unit root·persistence·meta-analysis

Imagine you are approving a multiyear plan for a cereal brand. Some changes in sales or market share last, and others fade. Should your team aim for lasting sales growth or a lasting market share gain?

Lasting marketing gains are possible far more often in sales than in market share.

Data chart

Sales levels shift for good more often than market share

Percent of published sales or market share histories whose level shifted for good after a change instead of drifting back to its usual level or path.

Brand sales shift for good more often than market share.
Most market share histories return toward a stable level.

Permanent change is more common in category sales than brand sales, and least common in market share.

Exact printed shares with permanent change: category or industry sales 92% (49 histories), brand or firm sales 59% (130 histories), market share 22% (40 histories). Sources: the performance-measure table (p. G114) and generalization 5.1's sales table (p. G116).

Action guide

Choose the outcome before approving the plan.Ask your team whether it targets lasting sales growth or a permanent market share gain.
Back category expansion for lasting sales growth.All else equal, give plans that expand total category demand more weight than plans that grow your brand's sales.
Treat a permanent market share gain as the harder target.Marketing spending tends to cancel out over time unless it expands total category demand.
Make evidence of permanent change a condition of approval.Ask your analysts to check sales or market share over a long enough period, at one consistent interval.
Require local evidence before transferring a sales growth plan.Ask your team whether local sales can change permanently before you assume a strategy transfers between continents.

Evidence

Sales levels change permanently, up or down, in 68% of the sales histories studied. Market share returns toward a stable level in 78% of its histories.
Category or industry sales change permanently in 92% of histories, versus 59% for brand or firm sales.
A lasting marketing effect requires a permanent change, but marketing need not have caused that change.
Sales levels change permanently in 72% of 163 histories from the United States and Canada, versus 29% of 17 from Europe. Market share mostly returns toward a stable level in the United States and Canada, and in Australia and New Zealand.
Annual histories are classified as changing permanently more often than quarterly or monthly ones because of the tests, not the underlying pattern.
Longer sales histories are more likely to be classified as changing permanently, but the length of a market share history makes no reliable difference.

Key takeaway

Sales levels can change permanently, while market share usually returns toward a stable level.

Limitations

The studies cover durable goods, everyday goods and services, mostly in North America, and measure permanent changes in sales or market share. They do not establish how much marketing contributes to those changes or how profitable its effects are.

Source

Dekimpe, M., & Hanssens, D. (1995). Empirical Generalizations About Market Evolution and Stationarity. Marketing Science, 14(3, Part 2), G109 to G121. [Published paper](https://doi.org/10.1287/mksc.14.3.G109).