Abstract

The authors develop a joint estimation approach to segment households on the basis of their response to price and promotion in brand choice, purchase incidence, and purchase quantity decisions. The authors model brand choice (what to buy) by multinomial logit, incidence (whether to buy) by nested logit, and quantity (how much to buy) by poisson regression. Response segments are determined probabilistically using a latent mixture model. The approach simultaneously calibrates sales response on two dimensions: across segments and the three purchase behaviors. The procedure permits market-level sales elasticities to be decomposed by segment and purchase behavior (i.e., choice, incidence, and quantity). The authors apply the approach to scanner panel data for the yogurt category and find substantial differences across segments in the relative impact of the choice, incidence, and quantity decisions on overall sales response to price.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.