ADVERTISING AND MARKET SHARE MOBILITY: A COMMENT
| Author | Tony McGuinness |
| DOI | http://doi.org/10.1111/j.1467-9485.1978.tb01189.x |
| Date | 01 February 1978 |
| Published date | 01 February 1978 |
Scottish
Journal
of
Political Economy,
Vol.
25,
No.
1,
February
1978
ADVERTISING AND MARKET SHARE
MOBILITY: A COMMENT
TONY MCGUINNESS
University
of
Shefield
I
INTRODUCTION
A
paper published in this
Journal
(Reekie, 1974) is offered as an empirical
investigation of the nature of the relationship between advertising and
competition. The author’s theoretical discussion, despite exposing many
aspects of the relationship in a satisfactory way, fails to confront the key
issue that is presented to the statistical analyst and, as a consequence, leads
to the employment of a statistical technique that is incapable of revealing
any of the important features of the relationship. This confusion leaves the
results of the paper open to mis-interpretation, unfortunately exemplified
by a reaction to Dr Reekie’s study published in the journal of the very
organisation that financed the research (Seldon, 1974). Finally, correction
of an arithmetic error within the statistical analysis leads to somewhat
different results to those reported by the author and raises a query about the
usefulness of this kind of analysis in any empirical work.
SUMMARY
OF
REEKIE’S
PAPER
In accordance with his views about which type of competition is important
in the process of Capitalist evolution Dr Reekie employs a “dynamic”
concept of competition. This is measured by four alternative indices based
on brand share mobility between 1971 and 1972 within the sub-markets
of
four broad product groups
:
Foodstuffs (34 sub-markets), Medicaments
(6),
Kitchen and Household Supplies
(1
5)
and Toiletries
(8).
Advertising for each
sub-market is measured by advertising expenditure for 1970 and 1971 as a
percentage of sales in 1971 and 1972.
The author’s theoretical discussion of the relationship between these
variables presents, on the one hand, reasons why advertising might be a
function of market share mobility and, on the other, reasons why market
share mobility might be a function of advertising. Moreover he presents not
only reasons why one might expect the effect of advertising on market share
mobility to be positive, but also reasons why the sign of this effect might be
Received in final
form:
14
September
1977.
101
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