To conduct their study, Peter N. Golder, Julie R. Irwin and Debanjan Mitra used two complementary datasets. First, they performed an in-depth search of archival records to compile a dataset of market share leaders in 125 categories, measured in seven different years from 1921 to 2010. Second, they use an IRI dataset of 883 product categories over 23 quarters during 2003-2008. This second dataset included marketing mix variables.
The dominant implication of our findings is that managers should fight hard to retain leadership. Once a brand’s leadership is lost, that loss is almost always permanent.
The study’s primary findings are:
1. Across sub-samples of different eras and category types, half of leading brands lose their leadership in periods ranging from 12-52 years.
2. The rate of market leadership persistence is substantially lower in recent eras than in earlier eras.
3. Once market leadership is lost, it is very rarely regained.
4. Leading brands are more (less) likely to persist during economic slowdowns (expansions).
5. Leading brands are more (less) likely to persist when inflation is higher (lower).
6. Leading brands are more (less) likely to persist when unemployment is higher (lower).
7. Certain category types have above-average (e.g., food and household supplies), below-average (e.g., clothing and durables), and average (e.g., personal care) rates of market leadership persistence.
One of the most impactful implications is that managers should work exceedingly hard to maintain leadership. Once lost, it’s almost always permanent. Another important finding is that market leadership can provide a hedge against poor performance in a weak economy. Here, the gains of private-label brands do not come at the expense of market-leading brands.
A third implication is that important factors affecting leadership persistence are outside of managers’ control. However, managers should attend to these factors when making decisions on other variables that they do control. Managers should also be well rewarded for maintaining leadership when these uncontrollable factors are working against them.