Defining Baseline Sales in a Competitive Environment

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Blattberg, Robert C.; Kim, ByungDo; Ye, Jianming
Issue Date
College of Business Administration (경영대학)
Seoul Journal of Business Vol2(1): 1~38(1996)
IPI and Neilsenmarketing effectsbrand equity
The baseline ("normal" sales) has become the most commonly used procedure
to measure the incremental effect of marketing variables, particularly
promotions. Firms such as IRI and Nielsen provide their clients with
baseline sales' estimates which they then use to determine the sales and
profit effects of consumer and trade promotions and, in some cases, measure
their brand equity. With the increasing importance of the baseline to the
measurement of marketing effects, it is necessary to develop an accurate
definition of the baseline and determine what it measures. This paper will
define baseline sales and discuss its implications, show that the incorporation
of competitive reaction is important to the definition of the baseline
and discuss how to use this concept when a firm has a broad product line. In
addition, we compare several baseline estimation methods using simulated
data and show the importance of incorporating a competitive reaction
component in baseline estimation. Finally, we apply the concept of competitive
reaction to actual sales data and show that the baseline computed without
a competitive reaction hnction is ~ i g ~ c a n tdliyff erent from the baseline
with a competitive reaction hnction.
This study investigates whether changes of oil price would have precedence,
exogeneity and causal prediction to the stock markets. The result
shows that changes of oil price have precedence over the stock returns in the
United States, Japan and Korea markets. And the evidence suggests that
there be exogeneity of oil to the stock markets because the stock returns can
be causally interpreted by the current or past changes of oil price during the
past two decades. Thus changes of oil price would contain any information
exploitable in forecasting the stock markets and have the predictive value of
leading indicators.
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 02, Number 1 (1996)
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