Working Paper: NBER ID: w24794
Authors: Doireann Fitzgerald; Anthony Priolo
Abstract: The question of how firms build market share matters for firm dynamics, business cycles, international trade, and industrial organization. Using Nielsen Retail Scanner data for the United States, we document that in the consumer food industry, brands experience substantial growth in market share in the first four years after successful entry into a regional market. However, markups are flat with respect to brand tenure. This finding is at odds with a large literature on customer markets which argues that firms acquire customers by temporarily offering low markups, and later raise markups once customers are locked in. However, it is consistent with a literature which emphasizes the importance of marketing and advertising activities for building market share.
Keywords: Market Share; Consumer Food Industry; Brand Dynamics; Pricing Strategies; Marketing Expenditures
JEL Codes: E3; L11; M3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market share growth (F62) | pricing strategies (D49) |
| market share growth (F62) | markups (D43) |
| tenure in a market (G10) | share of new customers in total sales (M13) |
| markups (D43) | market share growth (F62) |
| marketing expenditures (M30) | market share growth (F62) |