Empirical Analysis of Consumer Purchase Behavior: Interaction between State Dependence and Sensitivity to Marketing-Mix Variables

Olga Novikova () and Dmitriy Potapov
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Olga Novikova: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: People are intent to make similar choices especially in consumer goods markets. To address both explanations of this persistence, i.e. state dependence and heterogeneity in preferences, we use random coefficient logit model based on scanner panel data on juice purchases. The product differentiation of the chosen category allows us to model three dimensions of state dependence on brand, size and flavor characteristics. We provide evidence that the persistence in brand choices is positively correlated with persistence in size and flavor choices, thus the consumer pattern is prone to be inertial or variety seeking in every product characteristics. Simultaneously we show that the more sensitive to price and promotional activities consumers are, the less inertial is their behavior

Keywords: State dependence; random coefficient logit; product differentiation (search for similar items in EconPapers)
JEL-codes: D12 M31 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2015
New Economics Papers: this item is included in nep-dcm and nep-mkt
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Published in WP BRP Series: Management / MAN, December 2015, pages 1-17

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