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Marketing Models of Consumer Demand

Pradeep K. Chintagunta

University of Chicago

Harikesh Nair

Stanford University - Graduate School of Business

November 30, 2010

Chicago Booth Research Paper 11-11

Marketing researchers have used models of consumer demand to forecast future sales; to describe and test theories of consumer behavior; and to measure the response to marketing interventions. The basic framework typically starts from microfoundations of expected utility theory to obtain a statistical system that describes consumers’ choices over available options, and to thus characterize product demand. The basic model has been augmented significantly to account for quantity choice decisions; to accommodate purchases of several products on a single purchase occasion (multiple discreteness and multi-category purchases); and to allow for asymmetric switching between brands across different price tiers. These extensions have enabled researchers to bring the analysis to bear on several related marketing phenomena of interest.

This paper has three main objectives. The first objective is to articulate the main goals of demand analysis - forecasting, measurement and testing - and to highlight the desiderata associated with these goals. Our second objective is describe the main building blocks of individual-level demand models. We discuss approaches built on direct and indirect utility specifications of demand systems, and review extensions that have appeared in the marketing literature. The third objective is to explore interesting emerging directions in demand analysis including considering demand-side dynamics; combining purchase data with primary information; and using semiparametric and nonparametric approaches. We hope researchers new to this literature will take away a broader perspective on these models and see potential for new directions in future research.

Number of Pages in PDF File: 40

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Date posted: December 2, 2010 ; Last revised: March 2, 2011

Suggested Citation

Chintagunta, Pradeep K. and Nair, Harikesh, Marketing Models of Consumer Demand (November 30, 2010). Chicago Booth Research Paper 11-11. Available at SSRN: https://ssrn.com/abstract=1718571 or http://dx.doi.org/10.2139/ssrn.1718571

Contact Information

Pradeep K. Chintagunta (Contact Author)
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)

Chicago Booth School of Business Logo

Harikesh Nair
Stanford University - Graduate School of Business ( email )
655 Knight Way
Stanford, CA 94305-5015
United States
650-736-4256 (Phone)
HOME PAGE: http://faculty-gsb.stanford.edu/nair/index.html

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