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Market share determination in marketing service industries - A demand side approach

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  • Hengzhong Liu
  • Fotios Siokis

Abstract

A marketing service industry provides its business clients with its services such as advertising media or inbound telecommunication ( i.e. toll free 800 calls) to increase their sales. By extending Dorfman and Steiner (1954) to the world where firms obtain costly marketing services from outside specialized providers, this paper studies the market shares of providers of a marketing service from the perspective of their clients. It derives that at the optimal point for a representative client, a provider's market share equals the ratio of the profits contributed by its service to the total profits contributed by the services of all providers in the market. Under certain conditions, a provider's market share is just a function of quality-price ratios. This result should facilitate choosing a marketing service from alternative providers and analyzing market shares in marketing-service industries.

Suggested Citation

  • Hengzhong Liu & Fotios Siokis, 2003. "Market share determination in marketing service industries - A demand side approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 413-423.
    • Handle: RePEc:taf:ecinnt:v:12:y:2003:i:5:p:413-423
    DOI: 10.1080/1043859022000012733
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    References listed on IDEAS

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