A New Multidimensional Scaling Methodology for the Representation of Inter-Product Substitutability

Advances in Consumer Research, Vol. 15 Issue 1, p 18-527, 1988

11 Pages Posted: 27 May 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Richard Batsell

Rice University

Date Written: 1988

Abstract

Batsell and Polking (1985) have recently proposed a new class of market share models. The models demonstrate that it is possible to decompose the ratios of market shares for any pair of products in any choice set into a natural hierarchy of inter-product competitive effects. One level in this hierarchy is a measure of the degree to which a product, say k, cannibalizes the market share of product i relative to product j. This paper proposes a new multidimensional scaling (MDS) methodology which uses the revealed substitutability between products to derive a representation of the competing products as points in a space of prescribed dimensionality. An interesting feature of the methodology is that it allows for the derivation of spaces which are either symmetric or asymmetric. In the symmetric space, each product is represented as a single set of coordinates. In the asymmetric space, each product is represented as 2 sets of coordinates: one set of coordinates for each product as a "drawer" of market share, and a second set of coordinates for each product as a "drawee" from which the "drawers" take share. The methodology and corresponding algorithm are discussed in detail and two applications are used to demonstrate the procedure.

Suggested Citation

DeSarbo, Wayne S. and Batsell, Richard, A New Multidimensional Scaling Methodology for the Representation of Inter-Product Substitutability (1988). Advances in Consumer Research, Vol. 15 Issue 1, p 18-527, 1988, Available at SSRN: https://ssrn.com/abstract=2784882

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Richard Batsell

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
10
Abstract Views
223
PlumX Metrics