A new kind of consumer panel

Company: Nielsen

Author: Alain Pioche

Abstract:

When trying to set-up a marketing plan for the coming twelve months, the Brand Manager is usually facing two types of problems : a) How to forecast the global market evolution in the local area under consideration ? b) Within this total market, what could be the market shares for all the brands, according to the marketing efforts done by each of them ? The first question may be correctly answered using traditional econometric models : if the market is large enough, the sum of all the brand marketing activities may be considered as reflecting the overall economic interest for this sector of business, in comparison with other economic sectors. Moreover, the larger the market, the better is the econometric forecast : these tools are designed mostly for quite large aggregates, for which the traditional econometric assumptions hold. The second question is also usually answered by econometric models : however, all the assumptions underlying these models are very often not holding so well as far as market share forecasting is concerned. The most commonly adopted solution is to forecast the brand volume instead of the brand market share, considering the product in a pure monadic way : unfortunately, it leads most of the time to quite inappropriate results, having only a few to do with the real figures observed on the market some months later. The main reason why, is that total market is driven by variables being essentially different from the variables driving brand market shares : briefly stated, the total market is driven by macro- economic variables, while the market shares are almost totally depending on marketing activities. Being mainly a marketing tool, the NIELSEN Single-Source approach has to deal with the brand market share forecasting activity.

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