Modeling brand market share change in emerging markets

The purpose of this paper is to examine what happens to key brand performance metrics as brands change in market share, in the context of packaged goods. The metrics are: penetration—the number of buyers a brand has; and loyalty—measured as purchase frequency (PF) and share of category requirements (SCR).

The study utilizes 24 data sets in 17 packaged goods categories in three emerging markets: China, Malaysia and Indonesia. The authors examine changes in penetration, loyalty and SCR in the context of volume and value market share change. In addition, the authors examine whether initial price point and price movements influence the results.

The primary finding is that market share change is accompanied by a greater change in penetration than in any other metric. This finding is very consistent across categories and countries. The relative importance of the two loyalty metrics varies by country. SCR was a stronger factor in Indonesia, while PF was stronger in Malaysia. Analysis indicated that pricing strategy (initial price and promotional depth) did not alter the main pattern of results, suggesting the results hold for brands with different price levels and tactics.

Irrespective of circumstance, to grow in value or volume market share, brands should aim to grow in penetration, while the importance of changes in specific loyalty measures depends on market conditions.

This research extends past research on brand growth to the very different economic, geographic and cultural conditions of three crucially important emerging markets. Its main value lies in recommendations on how much to invest in building the size of the customer base vs consumer retention.