3 CDAP functions

The underlying paradigm of the model is that the market share of any one product is taken from the shares of other (but possibly not all other) products in its competitive set. A relative price reduction, for example, will take market share from other products and, in particular, those other products which are most similar in terms of perceived attributes. A relative increase in market strength brought about by a successful marketing campaign will similarly take share away from other, in some sense similar, products. We do not assume any symmetry in these relations. A product with much greater market strength will have a greater effect on the share of much weaker products than will the weaker products on the stronger.

Market-level parameters determine the relative importance of product differentiation, price differences and context-dependent preferences in each market. These parameters are determined endogenously because there is no reason to assume that these factors will have the same effects in different markets.