Modeling the Distribution of Price Sensitivity and Implications for Optimal Retail Pricing

Byung-Do Kim, Robert C. Blattberg and Peter E. Rossi
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Byung-Do Kim: Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, PA 15213, USA
Robert C. Blattberg: Kellogg Graduate School of Management, Northwestern University, Evanston, IL 60201, USA
Peter E. Rossi: Graduate School of Business, University of Chicago, Chicago, IL 60637, USA

Chapter 18 in Perspectives on Promotion and Database Marketing:The Collected Works of Robert C Blattberg, 2010, pp 283-295 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis article focuses on the distribution of price sensitivity across consumers. We employ a random-coefficient logit model in which brand-specific intercepts and price-slope coefficients are allowed to vary across households. The model is estimated with panel data for two product categories. The implications of the estimated model are deduced through an optimal retail pricing analysis that combines the panel data with chain-level cost figures. We test parametric distributional assumptions using semiparametric density estimates based on series expansions.

Keywords: Quantitative Marketing; Tracker Model; Customer Level Data; Marketing-Mix Modeling (search for similar items in EconPapers)
JEL-codes: M31 (search for similar items in EconPapers)
Date: 2010
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