Forecasting market shares of daily newspapers in Kenya :an application of the Markov brand switching model.

Abstract

The purpose of this study was to develop a model for measuring market shares of brands in a competitive market from aggregate data. The approach is to fit a markov brand switching model to secondary data. The elements of the transition matrix of the markov model are unknown,and are estimated by solving a series of simultaneous linear equations,formed from the observed brand shares of the three competitors in the daily English Newspaper market in Kenya. These are, the Daily Nation. The East African Standard and the Kenya Times.

The model developed was applied to forecast the market share of future years. The results of the study indicated that, if the present behavior of this market persists in future, and given the same operating conditions as for the period 1990 to 1991, it will be expected that the loyalty of the customers for the East African standard and the Kenya Times, will decrease consistently from period to period until at steady state when the brands will retain only 13 % and 1 % respectively, of the total market size while the Daily Nation will command 88 % of the market

The mam use proposed for the derived measures of market shares is the development of marketing strategy, and not necessarily for accurate forecasts, which may never be realized , because of the interactive nature of the market.