Demand and Distribution Relationships in the Ready-to-Drink Iced Tea Market: A Graphical Approach

Marketing Letters, 19 (1): 1-12, Lead Article, 2008

12 Pages Posted: 6 Sep 2015

See all articles by Bob Krider

Bob Krider

Simon Fraser University (SFU) - Beedie School of Business

Tieshan Li

Concordia University, Quebec

Yong Liu

University of Arizona

Charles Weinberg

University of British Columbia (UBC) - Sauder School of Business

Date Written: 2008

Abstract

The relationship between distribution coverage and market share for an incumbent brand and for new entrants in the ready-to-drink iced tea market during its growth phase is explored using state space diagrams. This graphical visualization method was originally developed to disentangle lead–lag relationships between short nonstationary time series, a situation in which standard econometric methods have difficulty. In this research we show the usefulness of this method for long time series in offering complementary insights to econometric models, in providing a simple and managerially useful tool, and in conducting exploratory data analysis to guide subsequent modeling decisions. In the ready-to-drink iced tea market, usage of this method shows that during introduction of new brands and growth of the category, demand leads distribution, but that as the market matures, the dominant incumbent can defend with a distribution-leading-demand dynamic. Further, distribution coverage eventually becomes relatively stable so that short term fluctuations in demand (probably due to responses to promotion) have minimal impact on distribution.

Keywords: Distribution, Market evolution, Time series, Measurement and inference, Retailing, Competitive analysis

Suggested Citation

Krider, Bob and Li, Tieshan and Liu, Yong and Weinberg, Charles, Demand and Distribution Relationships in the Ready-to-Drink Iced Tea Market: A Graphical Approach (2008). Marketing Letters, 19 (1): 1-12, Lead Article, 2008, Available at SSRN: https://ssrn.com/abstract=2656378

Bob Krider

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Tieshan Li

Concordia University, Quebec ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

Yong Liu (Contact Author)

University of Arizona ( email )

1130 E Helen Street
Tucson, AZ 85721
United States

HOME PAGE: http://https://eller.arizona.edu/people/yong-liu

Charles Weinberg

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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