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A Model for Trade-Up and Change in Considered Brands

36 Pages Posted: 17 Feb 2008  

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics

Mark J. Garratt

In4mation Insights

Peter E. Rossi

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: 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.

Keywords: Nonhomothetic utility, extended product categories, Bayesian analysis

JEL Classification: C11, C35, M31

Suggested Citation

Allenby, Greg M. and Garratt, Mark J. and Rossi , Peter E., A Model for Trade-Up and Change in Considered Brands (February 1, 2008). Available at SSRN: https://ssrn.com/abstract=1094294 or http://dx.doi.org/10.2139/ssrn.1094294

Greg M. Allenby (Contact Author)

Ohio State University (OSU) - Department of Marketing and Logistics ( email )

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States

Mark J. Garratt

In4mation Insights ( email )

Boston, MA
United States

Peter E. Rossi

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
773-294-8616 (Phone)

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