The effects of advertising, prices and distribution on market share volatility

Although the influence of marketing decision variables on market share has received ample attention in the literature, less is known about their effects on volatility. This study attempts to shed light on this issue by empirically examining the effects of advertising, pricing and distribution, not only on market share but also on its volatility, using an EGARCH model. We argue that establishing a link between management-controlled actions, such as advertising, pricing and distribution, and market share volatility may benefit firms seeking to reduce uncertainty in their market share performance. Application of the proposed model to data on two markets (SUVs and Minivans), suggested that advertising, pricing and distribution significantly influence market share volatility.