Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103627
Authors: 
Fok, Dennis
Paap, Richard
Franses, Philip Hans
Year of Publication: 
2014
Citation: 
[Journal:] Econometrics [ISSN:] 2225-1146 [Publisher:] MDPI [Place:] Basel [Volume:] 2 [Year:] 2014 [Issue:] 1 [Pages:] 20-44
Abstract: 
We put forward a brand choice model with unobserved heterogeneity that concerns responsiveness to marketing efforts. We introduce two latent segments of households. The first segment is assumed to respond to marketing efforts, while households in the second segment do not do so. Whether a specific household is a member of the first or the second segment at a specific purchase occasion is described by household-specific characteristics and characteristics concerning buying behavior. Households may switch between the two responsiveness states over time. When comparing the performance of our model with alternative choice models that account for various forms of heterogeneity for three different datasets, we find better face validity for our parameters. Our model also forecasts better.
Subjects: 
marketing-instrument effectiveness
heterogeneity
multinomial probit
finite mixtures
JEL: 
L8
L83
L2
C20
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Article
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