Household heterogeneity and state dependence in a model of purchase strings: empirical results and managerial implications

Article Abstract:

A choice model which considers a household's string of purchases as the unit of analysis was presented to address the difficulty of dividing the effects of household heterogeneity from state dependence in brand choice models. The model, which differs from traditional models of individual purchases, is applied to a price promotion simulation. Results reveal that dividing the effects of state dependence from heterogeneity allows for precise assessment of promotion profitability and the prioritization of market segments for the use of promotional activities.

Consumer Behavior, Econometrics & Model Building, Research, Econometrics, Brand choice, Consumer preferences, Business models

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Investigating the effects of marketing variables and unobserved heterogeneity in a multinomial probit model

Article Abstract:

A multinomial probit model of brand choice is used to gauge the effects of heterogeneity to account for households' brand preferences and sensitivity to price variations. Estimating the parameters of the probit model involved utilizing the method of simulated moments. It is imperative that the parameters involve an accounting of the households' preferences for particular brands as opposed to the different brands in the market. Non-random choices of households and price as the sole marketing variable are among the limitations of the study.

Methods, Marketing, Marketing models, Simulation methods, Simulation

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Heterogeneity in nested logit models: an estimation approach and empirical results

Article Abstract:

A logit model is used to analyze heterogeneity in intrinsic brand preferences and purchase propensities. The approach is based on the random effects specification to account for heterogeneity in conditional brand choice models. The results indicate that heterogeneity is characterized by variances in purchase histories and differences in intrinsic brand preferences and purchase propensities. This shows that the effects of marketing variables are affected if household heterogeneity is disregarded in estimates.

Analysis, Estimation theory, Logits

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