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

Nitin Mehta ()
Additional contact information
Nitin Mehta: Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada

Marketing Science, 2007, vol. 26, issue 2, 196-217

Abstract: 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 consumer's 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.

Keywords: multicategory brand choice and purchase incidence decision making; microeconomic theory of demand; basket utility maximization; simulated maximum likelihood (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.1060.0214 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:26:y:2007:i:2:p:196-217

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().