Empirical Generalizations About Market Evolution and Stationarity

Abstract

We present empirical generalizations about conditions under which marketing variables evolve or remain stationary. We first define evolution statistically and make the case why it is an important concept for increasing our understanding of long-run marketing effectiveness. We then briefly review ways in which evolution can be tested empirically from readily available data. We present a database of over 400 prior analyses and catalog the relative incidence of stationarity versus evolution in market performance and marketing spending. We find that evolution is the dominant characteristic for sales and marketing-mix spending, but that stationarity is the dominant characteristic for market share. Thus we find strong support for the conjecture that many markets are in a long-run equilibrium where the relative position of the players is only temporarily disturbed by their respective marketing activities. We assess the impact of a number of covariates on the likelihood of finding stationarity/evolution in sales and market share, and discuss the managerial implications of our findings.