36 Pages Posted: 17 Feb 2008
Date Written: 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.
Keywords: Nonhomothetic utility, extended product categories, Bayesian analysis
JEL Classification: C11, C35, M31
Suggested Citation: 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