Most approaches to examining the effects of marketing variables on market shares treat the market as a single aggregate. Examining the marketing effects at the segment level would be more useful managerially. Recently, Grover and Srinivasan proposed that a market segment be defined as a group of consumers homogeneous in terms of the probabilities of choosing the different brands in a product class. The market is thereby segmented into brand loyal segments and multiple switching segments. The authors extend this approach to allow the within-switching-segment market shares to vary across periods. The changes over time in within-segment market shares are related to marketing variables such as price and promotion through a logit model. Application of the model to data from a scanner panel shows that the proposed approach produces a modest improvement in predictive validity in comparison with the traditional approach of treating the market as a single aggregate.
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