Group for Research in Decision Analysis

G-2014-65

Umbrella-branding spillovers

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In this paper, we extend the classical market-share attraction model to a multi-category setting to include umbrella-branding spillover. Our starting conjecture is that the market share of a national or private brand in one category benefits from its performance in another category, and vice versa. There is an important literature dealing with cross-category interactions, but the thinking is in term of substitutability or complementarity between the products offered in the two or more categories under investigation. Here, our focal point (and contribution) is the link at the brand level. Indeed, we only require that at least one brand is offered in at least two of the categories of interest. Further, the spillover considered is not specific to marketing instruments, but is generated by the brand performance (attraction or market share), which is the result of both the firm's marketing-mix choice and competitors' marketing policies.

We illustrate our model with data concerning two hygiene categories, namely, toothpaste and toothbrushes. We obtain that umbrella-branding spillover is (i) significant and positive; (ii) asymmetric, i.e., the spillover is not equal in both directions; and (iii) variable across brands. Our results show that not accounting for umbrella-branding spillover leads to misestimating the parameters of a market-share model. Providing accurate assessment for category-spillover governing the competing brands, our results derive strategic implications for new-product introduction, product-portfolios building and brand-lines management in a cross-category perspective.

, 19 pages