Marketing Science

Currim, Imran S.; Schneider, Linda G.

doi: 10.1287/mksc.10.2.91pmid: N/A

This paper proposes a taxonomy of consumer purchase strategies based on household decisions about which brand to purchase, how much, and when to purchase in a promotion intensive environment. We infer decision rules at the household level from supermarket scanner panel data and then cluster the inferred choice routes in order to discover the major purchasing strategies used in our population of interest. Subsequently, we test for the distribution of these purchase strategies in our customer population. Results add to our knowledge of consumer behavior in response to promotions.

Pedrick, James H.; Zufryden, Fred S.

doi: 10.1287/mksc.10.2.111pmid: N/A

We propose a model to analyze the impact of advertising media plans and point-of-purchase marketing variables on a brand's market performance. Our model integrates brand choice, purchase incidence, and exposure behavior within a nonstationary stochastic framework. Moreover, it considers various aspects of consumer heterogeneity including individual differences in loyalty levels, purchase rates, and exposure probabilities for a population of consumers. The integrated model provides a relationship of advertising exposures from media plans, and other marketing variables, to measures of a brand's performance that include market share, penetration and depth of repeat patterns over time. In this paper, we focus on a multi-brand model formulation and stress its application to the analysis of advertising media plans. Based on single-source UPC scanner panel data for a frequently purchased product category, we provide an empirical test of the model. In this context, our analyses show that the model provides a good fit to the empirical data as well as accurate forecasts in hold-out predictive tests.

Rao, Ram C.

doi: 10.1287/mksc.10.2.131pmid: N/A

This paper develops a modeling framework for making promotions decisions. In contrast to some of the prior research, the framework explicitly models promotions. Its central feature is the view of promotions competition as a multistage game in which regular prices are chosen first, followed by the choice of promotion depths and frequencies. It is used to illustrate the nature of competition between a national brand and private label. In equilibrium, the national brand promotes to ensure that the private label does not try to attract consumers away from the national brand. Moreover, the private label does not promote. This equilibrium is also contrasted with Varian's framework, used by other researchers, in which mixed strategy equilibrium prices are interpreted as promotions.

Chatterjee, Sangit; Jamieson, Linda; Wiseman, Frederick

doi: 10.1287/mksc.10.2.145pmid: N/A

At the mathematical level, a factor or principal component of a factor analysis is simply a linear combination of variables under some constraints. Therefore, as in regression analysis, there are conditions under which individual or joint observations can be influential in the sense that their presence or absence significantly influences the obtained values of the estimated factor loadings. The nature of these effects as well as potential effects due to “gross errors” in the data set should be investigated in order to determine which observations, if any, need to be analyzed separately or excluded entirely. The purpose of this paper is (1) to propose a new technique for identifying influential observations and observations containing “gross errors” and (2) to discuss situations under which each is likely to significantly alter the results of a factor analysis.

Ghemawat, Pankaj

doi: 10.1287/mksc.10.2.161pmid: N/A

This paper uses a case study and a simple mathematical model to study the link between the incumbency and incentives to innovate and introduce drastically new products. It identifies the conditions under which fears of self-cannibalization are particularly likely to lead incumbents to soft-pedal such innovations.

Krishnamurthi, Lakshman; Raj, S. P.

doi: 10.1287/mksc.10.2.172pmid: N/A

This empirical paper explores the relationship between consumer brand preference or loyalty and price elasticity in purchase behavior. This behavior is conceptualized as resulting from two distinct but related decisions, namely a brand choice decision and a purchase quantity decision. We argue that loyal consumers will be less price sensitive in the choice decision than nonloyal consumers. However, this direction is expected to be reversed in the quantity decision with loyal consumers expected to be more price sensitive than nonloyal consumers.We model the choice and quantity decisions jointly using the limited dependent variable framework described in Krishnamurthi and Raj. The data used are diary panel data on a frequently purchased product class from BURKE and caffeinated ground coffee scanner data from IRI. We show that loyals are less price sensitive than nonloyals in the choice decision but more price sensitive in the quantity decision. Managerial implications of the differing elasticities are discussed.