Short-Run Needs and Long-Term Goals: A Dynamic Model of Thirst Management

Guofang Huang (), Ahmed Khwaja () and K. Sudhir ()
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Guofang Huang: Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Ahmed Khwaja: Yale School of Management, New Haven, Connecticut 06520
K. Sudhir: Yale School of Management, New Haven, Connecticut 06520

Marketing Science, 2015, vol. 34, issue 5, 702-721

Abstract: Beverage consumption occurs many times a day in response to short-run needs that fluctuate. We develop a model in which consumers are heterogeneous in self-regulating consumption by balancing short-run needs (e.g., hydration and mood) with long-term goals (e.g., health). The model has two novel features: (1) utility depends on the match between occasion-specific needs and product attributes, and (2) dynamics of consumption and stockpiling are at the level of product attributes. We estimate the model using unique intraday beverage consumption, activity, and psychological needs data. We find that only a third of individuals do not self-regulate. Of the two-thirds who self-regulate, over 40% self-regulate adaptively based on past choice, whereas 25% self-regulate both adaptively and anticipating future needs. Our attribute–need match model enables us to assess unmet demand for new products with attributes that match co-occurring occasion-specific needs. Specifically, we find that a product satisfying a combination of “health-hydrating” needs expands overall beverage consumption by as much as 5%. Our framework of modeling heterogeneity in self-regulation by balancing short-run needs with long-term goals is more broadly applicable in contexts where situational needs vary, and long-term effects are gradual and hard to discern (e.g., nutrition, smoking, and preventive health care).

Keywords: dynamic discrete choice; EM algorithm; self-regulation; stockpiling; health care; needs; goals; obesity; beverages; new product introductions (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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