An Empirical Pooling Approach for Estimating Marketing Mix Elasticities with PIMS Data

Marketing Science, 12:1 , 103-124 (1993)

22 Pages Posted: 4 Jun 2016

See all articles by Venkatram Ramaswamy

Venkatram Ramaswamy

University of Michigan, Stephen M. Ross School of Business

Wayne S. DeSarbo

Pennsylvania State University

David Reibstein

University of Pennsylvania - Marketing Department

William T . Robinson

University of Michigan, Stephen M. Ross School of Business

Date Written: 1993

Abstract

The PIMS (Profit Impact of Marketing Strategies) data entail sparse time-series observations for a large number of strategic business units (SBUs), In order to estimate disaggregate marketing mix elasticities of demand, a natural solution is to pool different SBUs. The traditional, a priori approach is to pool together those SBUs which one believes in advance to be very similar with respect to their marketing mix elasticities. We propose an alternative maximum likelihood, latent-pooling method for simultaneously pooling, estimating, and testing linear regression models empirically. This method enables the determination of a “fuzzy” pooling scheme, while directly estimating a set of marketing mix elasticities and intertemporal covariances for each pool of SBUs. Our analyses reveal different magnitudes and patterns of marketing mix elasticities for the derived pools. Pool membership is influenced by demand characteristics, business scope, and order of market entry.

Keywords: econometric models, regression and other statistical techniques, marketing mix, competitive strategy

Suggested Citation

Ramaswamy, Venkatram and DeSarbo, Wayne S. and Reibstein, David and Robinson, William T ., An Empirical Pooling Approach for Estimating Marketing Mix Elasticities with PIMS Data (1993). Marketing Science, 12:1 , 103-124 (1993), Available at SSRN: https://ssrn.com/abstract=2789058

Venkatram Ramaswamy

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

701 Tappan Street
Ann Arbor, MI MI 48109-1234
United States
734-763-5932 (Phone)
734-936-0279 (Fax)

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

David Reibstein

University of Pennsylvania - Marketing Department

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

William T . Robinson

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

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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