Store Choice and Location in a Competitive Market

By Michael H. HansenCharles B. Weinberg
1976| Working Paper No. 309

In competitive markets, it is not unusual to find several providers of the same generic good or service in a shopping area. In this study, it is shown that a company’s market share i s a function of outlet share, relative location in a shopping area, whether or not the outlet is new, and image of the company, a variable not related to the location of the outlet. These results suggest that the heuristic “market share = outlet share” needs to be questioned, at least in small geographic areas, and that both non-linear and multivariate functions should be considered in developing models of market share of distributive organizations.