Repurchase Acceleration: Measuring Repurchase Responses to Major Events

Abstract:     
Major market events, such as the launch of influential new products or product-harm crises, change consumer preferences and strongly impact the financial returns of firms. To properly react, it is important to predict consumers’ repurchase responses to such events and understand the reasoning behind these responses. We propose a new method, repurchase acceleration (RA), which buys back consumers’ currently owned products or services and let them repurchase from a carefully designed choice set that mimics the market after a major event has taken place. This method enables managers to observe real repurchase behaviors instead of hypothetical intentions and gathers in-depth information for managers to study the impact of the event and target individual consumers. We implement RA in an empirical study and compare its performance to widely adopted repurchase intention questions. Using a simple model, RA obtains a hit rate of as high as 96.3% and captures more than twice the amount of information that is captured by the best intention models. Managerial implications are drawn based on the behavioral data collected using RA.

Number of Pages in PDF File: 50

Keywords: Repurchase Acceleration, Repurchase Intention, Events Management, Incentive Alignment

JEL Classification: C42, C81, C91, C93, M31

working papers series