Market share leadership is a strategic imperative at many leading companies. However, surprisingly little is known about market leaders. This study addresses four key issues: (1) the frequency of market leaders maintaining their leadership over periods ranging from 5 to 89 years; (2) whether leading brands that lose their leadership are able to regain it or whether loss of leadership tends to be permanent; (3) whether market leadership persistence varies as a function of economic conditions (i.e., GDP growth rate, inflation, unemployment); and (4) whether market leadership persistence varies by category type.

The authors use two complementary datasets. First, they conduct an exhaustive search of archival records to compile a dataset of market share leaders in 125 categories measured in seven different years from 1921 to 2010. Second, they use an IRI dataset of 883 product categories over 23 quarters during 2003-2008. This second dataset includes marketing mix variables.

The study’s primary findings are:

1. Across sub-samples of different eras and category types, half of leading brands lose their leadership in periods ranging from 12-52 years.
2. The rate of market leadership persistence is substantially lower in recent eras than in earlier eras.
3. Once market leadership is lost, it is very rarely regained.
4. Leading brands are more (less) likely to persist during economic slowdowns (expansions).
5. Leading brands are more (less) likely to persist when inflation is higher (lower).
6. Leading brands are more (less) likely to persist when unemployment is higher (lower).
7. Certain category types have above-average (e.g., food and household supplies), below-average (e.g., clothing and durables), and average (e.g., personal care) rates of market leadership persistence.

The dominant implication of our findings is that managers should fight hard to retain leadership. Once a brand’s leadership is lost, that loss is nearly always permanent. A second implication is that market leadership provides a hedge against poor performance in a weak economy. Here, the gains of private-label brands do not come at the expense of market-leading brands. A third implication is that important factors affecting leadership persistence are outside of managers’ control. However, managers should attend to these factors when making decisions on other variables that they do control and managers should be especially rewarded for maintaining leadership when these uncontrollable factors are working against them.

Peter N. Golder is Professor of Marketing at the Tuck School of Business, Dartmouth College, Julie R. Irwin is Professor of Marketing at the McCombs Business School, University of Texas at Austin, and Debanjan Mitra is Associate Professor of Marketing at the Warrington College of Business Administration, University of Florida.

Acknowledgments

The authors appreciate the valuable comments of Susan Broniarczyk, Bob Shoemaker, K. Sudhir, and the participants of the 2012 Theory and Practice in Marketing Conference at Harvard Business School.

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