Statistical Inference Using Stochastic Switching Models for the Discrimination of Unobserved Display Promotion from POS Data

Tadahiko Sato (), Tomoyuki Higuchi () and Genshiro Kitagawa ()

Marketing Letters, 2004, vol. 15, issue 1, 37-60

Abstract: The execution of price and/or display promotion has a significant effect on the sales of a brand sold in a supermarket. Information on price and/or sales is available from POS data. However, unless an investigator collects information on the execution of display promotions from every retail store, such information is unavailable. This paper presents a method of identifying whether display promotion has been executed without having to visit individual stores. We treat the execution/non-execution of a display promotion as a state variable. An unknown stationary probability matrix is assumed to describe the probability of a transition between states. Each state is characterized by a different stationary time series model with unknown parameters. The objective of the analysis is to identify the model and to assign a probability model for each state at each time instant. Finally, we provide a high precision estimator of a past execution/non-execution of a display promotion based on the proposed model.

Date: 2004
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