The Impact of Dealing Patterns on Purchase Behavior

Marketing Science, Vol. 13, No. 4. (Autumn, 1994), pp. 351-373

24 Pages Posted: 21 Jan 2015

See all articles by Aradhna Krishna

Aradhna Krishna

University of Michigan, Stephen M. Ross School of Business

Date Written: January 19, 2015

Abstract

We explore the effect of dealing patterns on consumer purchase behavior by developing a normative purchase quantity model that can incorporate an),dealing pattern. The model adds to the stream of research on optimal purchasing policy by demonstrating how dealing patterns can be incorporated in a simple manner in dynamic programming models. Implications for purchase behavior are derived by employing the model in a numerical simulation in which time between deals is characterized by a Weibull distribution. The flexibility of the Weibull distribution enables us to establish how particular facets of the dealing distribution (e.g., certainty in deal timing, minimum time between deals) affect consumer behavior with respect to optimal purchase quantity, inventory, etc. One of the implications of the model is that the average quantity purchased on deal should be larger when there is greater certainty in deal timing. The model also shows that the average quantity purchased on deal should be larger when deals are spaced further apart, even though the buyer is presented with the same number of deals. We test certain model implications in a laboratory experiment and find actual behavior varying across dealing patterns in a manner consistent with model implications.

Suggested Citation

Krishna, Aradhna, The Impact of Dealing Patterns on Purchase Behavior (January 19, 2015). Marketing Science, Vol. 13, No. 4. (Autumn, 1994), pp. 351-373, Available at SSRN: https://ssrn.com/abstract=2552259

Aradhna Krishna (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States