How Distribution Drives Market Share

Product & Brand ManagementWilbur, K. C.; Farris, P. W. (2014) · 2014Journal of Retailing
Topicsdistribution·market share·double jeopardy·cpg·acv·new product launch·sku

Your team brings you a new-product launch plan built on an optimistic distribution target and a matching share forecast. Approve it, and you commit millions in retailer fees before a single unit sells. The question is whether that share number is realistic. This research shows the answer is already sitting in your own portfolio: the relationship between your existing products' distribution and the share they earn is a reliable yardstick for whether a new product's plan holds up, or is quietly overpromising.

Share isn't proportional to distribution: the best-stocked products hold disproportionately more.

Most planning assumes that getting a product into more stores raises market share in proportion. The data say otherwise. Compare the products inside a category and the best-distributed ones hold disproportionately more share per point of distribution than thinly stocked ones. That comparison is across products at one point in time, not one product tracked as its distribution grows, and a brand's own weakest products are not exempt from it.

Data chart

The accelerating pattern is most common among leading brands

90Rank 1 brands7676617261383824Rank 9 brands

The accelerating pattern shows up in almost every leading brand but in fewer and fewer brands further down the ranking, so a brand's rank changes how reliably the pattern applies.

Action guide

  1. Check a launch plan against your own products' curve.Plot the distribution and share your existing products already trace, then see where the new product's assumptions sit. Because the curve never flatters a new product, and a product that misses it misses low, a plan that assumes better-than-curve performance is the risk case to re-examine.
  2. Put an independent check on distribution assumptions in your new-product gate.Nearly a third of launches fail within a year, and optimistic distribution numbers are easy to slip into a forecast.
  3. Scrutinize those assumptions hardest where the curve is steepest.It is steeper in higher-revenue categories and, separately, in more concentrated ones, and that is where a thinly stocked product holds the least share for its distribution.
  4. Do not assume a strong brand protects its smaller products.A leader's thinly stocked items hold disproportionately little share too. The paper documents the pattern but does not test pruning or repositioning, so treat those remedies as an inference worth piloting, not a proven fix.
  5. Apply this to U.S. grocery, drug, and mass-channel CPG products.The evidence is a 2003-2005 census of 37 categories excluding Wal-Mart, club, convenience, and private label; test before extending to those channels.

Evidence

  • Across a category's products, market share accelerates with how widely each one is stocked: the best-distributed products hold disproportionately more share than thinly stocked ones, and the gap is biggest at the high end.
  • The accelerating pattern held in 33 of 37 product categories studied, so it is the rule, not an exception.
  • A leading brand's own weakest products aren't spared either: within the brand's line, its thinly stocked products hold far less share per point of distribution than its best sellers do.
  • The pattern is steepest in higher-revenue and more concentrated categories, and, separately, in beauty and personal-care product types.
  • Roughly 29% of new products launched in 2004 had failed completely within twelve months; even category leaders failed about 32% of the time.
  • A brand's existing distribution-to-share curve predicts new products well, and it never flatters them: when a new product misses the curve, it misses low.

Key takeaway

Across a category's products, share accelerates with distribution rather than rising in proportion to it, so the best-distributed products hold disproportionately more share than thinly stocked ones.

Source

Wilbur, K. C., & Farris, P. W. (2014). Distribution and market share. Journal of Retailing, 90(2), 154–167. https://doi.org/10.1016/j.jretai.2013.08.003

Read the paper ↗

Evidence strength: Strong, but descriptive. The study documents a repeatable pattern, replicated across categories, linking how widely a product is stocked to its market share; it does not prove that adding distribution causes a proportional share gain, and it does not measure return, payback, or margins. Scope: US grocery, drug, and mass CPG categories; excludes Wal-Mart, club, convenience, and private label. The census covers about 79,000 products, comparing products at one point in time rather than tracking one product's distribution over time.