A Model for Trade-Up and Change in Considered Brands
Greg M. Allenby
Ohio State University (OSU) - Department of Marketing and Logistics
Mark J. Garratt
Peter E. Rossi
University of California, Los Angeles (UCLA) - Anderson School of Management
February 1, 2008
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, M31working papers series
Date posted: February 17, 2008
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