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A Model for Trade-Up and Change in Considered BrandsGreg M. AllenbyOhio State University (OSU) - Department of Marketing and Logistics Mark J. GarrattIn4mation Insights Peter E. RossiUCLA-Anderson School of Management February 1, 2008 Abstract: A common theme in the marketing literature is the acquisition and retention of customers as they trade-up from inexpensive, introductory offerings to those of higher quality. Standard models of choice, however, apply to narrowly defined categories for which assumptions of near-perfect-substitution are valid. We extend the non-homothetic choice model of Allenby and Rossi (1991) to accommodate effects of advertising, professional recommendation and other factors that facilitate the description and management of trade-up. The model is applied to a national study of an over-the-counter health product.
Number of Pages in PDF File: 36 Keywords: Nonhomothetic utility, extended product categories, Bayesian analysis JEL Classification: C11, C35, M31 working papers seriesDate posted: February 17, 2008Suggested CitationContact Information
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