The price consideration model of brand choice

Ching, A; Erdem, T; Keane, M

The price consideration model of brand choice

Ching, A Erdem, T Keane, M

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Publisher:: John Wiley and Sons
Publication Type:: Journal Article
Citation:: Journal of Applied Econometrics, 2009, 24 (3), pp. 393 - 420
Issue Date:: 2009-01

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Field	Value	Language
dc.contributor.author	Ching, A	en_US
dc.contributor.author	Erdem, T	en_US
dc.contributor.author	Keane, M	en_US
dc.date.issued	2009-01	en_US
dc.identifier.citation	Journal of Applied Econometrics, 2009, 24 (3), pp. 393 - 420	en_US
dc.identifier.issn	0883-7252	en_US
dc.identifier.uri	http://hdl.handle.net/10453/9989
dc.description.abstract	The workhorse brand choice models in marketing are the multinomial logit (MNL) and nested multinomial logit (NMNL). These models place strong restrictions on how brand share and purchase incidence price elasticities are related. In this paper, we propose a new model of brand choice, the price consideration (PC) model, that allows more flexibility in this relationship. In the PC model, consumers do not observe prices in each period. Every week, a consumer decides whether to consider a category. Only then does he/she look at prices and decide whether and what to buy. Using scanner data, we show the PC model fits much better than MNL or NMNL. Simulations reveal the reason: the PC model provides a vastly superior fit to inter-purchase spells	en_US
dc.publisher	John Wiley and Sons	en_US
dc.relation	http://purl.org/au-research/grants/arc/FF0561843
dc.relation.ispartof	Journal of Applied Econometrics	en_US
dc.relation.isbasedon	10.1002/jae.1053	en_US
dc.subject.classification	Econometrics	en_US
dc.title	The price consideration model of brand choice	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	24	en_US
utslib.for	140302 Econometric and Statistical Methods	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	1403 Econometrics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access
pubs.consider-herdc	true	en_US
pubs.issue	3	en_US
pubs.volume	24	en_US

Abstract:

The workhorse brand choice models in marketing are the multinomial logit (MNL) and nested multinomial logit (NMNL). These models place strong restrictions on how brand share and purchase incidence price elasticities are related. In this paper, we propose a new model of brand choice, the price consideration (PC) model, that allows more flexibility in this relationship. In the PC model, consumers do not observe prices in each period. Every week, a consumer decides whether to consider a category. Only then does he/she look at prices and decide whether and what to buy. Using scanner data, we show the PC model fits much better than MNL or NMNL. Simulations reveal the reason: the PC model provides a vastly superior fit to inter-purchase spells

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http://hdl.handle.net/10453/9989