Edeling, Alexander and Alexander Himme (2018), “When Does Market Share Matter? New Empirical Generalizations from a Meta-Analysis of the Market Share–Performance Relationship,” Journal of Marketing, 82 (3), 1-24.
The impact of market share on financial firm performance is one of the most widely studied relationships in marketing strategy research. However, since the meta-analysis by Szymanski, Bharadwaj, and Varadarajan (1993), substantial environmental (e.g., digitization) and methodological (e.g., accounting for endogeneity) developments have occurred. The current work presents an updated and extended meta-analysis based on all available 863 elasticities drawn from 89 studies and provides the following new empirical generalizations: (1) The average raw market share–financial performance elasticity is .132, which is substantially lower than the effectiveness of other intermediate marketing metrics. This result challenges a widely used strategy that solely focuses on increasing market share. (2) Elasticities differ significantly between contextual settings. For example, they are lower for business-to-business firms than for business-to-consumer firms, for service firms than for manufacturing firms, and for U.S. markets than for emerging and Western European markets. The authors also observe differences between countries with respect to a general time trend (e.g., lower elasticities in recent times for Western European markets) and recessionary periods (e.g., lower elasticities in the United States, higher elasticities in non-Western economies).
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Financial Decision Making; Marketing-Finance Interface; Marketing Analytics; Marketing Metrics
Related Marketing Courses:
Brand Management; Marketing Analytics; Principles of Marketing, Core Marketing, Introduction to Marketing Management; Marketing Strategy;
Special thanks to Kelley Gullo, Ph.D. candidate at Duke University, for her support in working with authors on submissions to this program.
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