Cointegration analysis and category sales: Stationarity and long-run equilibrium in market shares (Q2744947)

This paper shows how modern time series methodology (such as unit-root econometrics and cointegration analysis) can be used for deep analysis of long-run equilibrium in markets. The main objectives of the paper are: (1) to provide additional evidence of the frequent existence of stationary market shares for frequently purchased consumer products; (2) to demonstrate that prior empirical evidence that a majority of sale series is in evolution consistent with stationary market shares, if brand sales and category sales are cointegrated; (c) to distinguish, from strategic perspective, between market response at the primary-demand level (category sales), selective-demand level (brand sales) and relative-positive level (market share) and identify strategic scenarios depending upon their stable/evolution nature. For instance, analyzing data from 28 brands across eight product categories the authors demonstrate that market shares either for all brands or for major brands are stationary. They also find that competitive activities may, in general, have only a temporary effect on market shares and indicate that promotions and other marketing activities are unlikely to increase share in the long run. But there exist the potential to disturb equilibrium through new products and product improvements.