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Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis

Mehta, Nitin

Marketing science (Providence, R.I.), 2007-03, Vol.26 (2), p.196-217 [Peer Reviewed Journal]

Linthicum: INFORMS

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Title:
Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis
Author: Mehta, Nitin
Subjects: Analysis ; basket utility maximization ; Brand choice ; Brand preferences ; Brands ; Coincidence ; Comparative analysis ; Consumer behavior ; Consumer preferences ; Consumers ; Detergents ; Liquids ; Marketing ; microeconomic theory of demand ; Microeconomics ; Modeling ; multicategory brand choice and purchase incidence decision making ; Out of stock ; Parametric models ; Price elasticity ; Product choice ; simulated maximum likelihood ; Stochastic models ; Studies ; Utility functions ; Utility maximization
Is Part Of: Marketing science (Providence, R.I.), 2007-03, Vol.26 (2), p.196-217
Description: We propose a framework to investigate consumers brand choice and purchase incidence decisions across multiple categories, where both decisions are modeled as an outcome of a consumers basket utility maximization. We build the model from first principles by theoretically explicating a general model of basket utility maximization and then examining the reasonable restrictions that can be placed to make the solution tractable without sacrificing its flexibility. Comparing with prior models, we show why prior multicategory purchase incidence models overemphasize the role of the cross effects of a market mix of brands in other categories on the purchase incidence decision of a given category. Additionally, we show that prior single-category models are a special case of the proposed model when further restrictions are placed on the basket utility structure. We estimate the model on household basket data for the laundry family of categories. We show (i) why prior single-category and multicategory models would systematically bias the estimates of the own- and cross-price/promotional purchase incidence elasticities; and (ii) how the market mix of each brand in each category affects the purchases across all categories, which can help retailers make promotional decisions across a portfolio of products.
Publisher: Linthicum: INFORMS
Language: English

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Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis

Mehta, Nitin

Linthicum: INFORMS

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