Analyzing household brand switching: A stochastic model

In a recent study, Kahn, Morrison and Wright showed that for exponentially distributed interpurchase times (of individuals), the household choice process approaches a zero-order process as the number of individuals in the household increases, even though the purchasing behavior of each individual is...

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Bibliographic Details
Published in:European journal of operational research 1994-07, Vol.76 (2), p.298-308
Main Authors: Jain, Dipak C., Niu, Shun-Chen
Format: Article
Language:English
Subjects:
Brand preferences
Consumer behavior
Households
Interpurchase time
New better than used in expectation
Operations research
Panel data
Renewal theory
Stochastic models
Studies
Zero-order process
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Summary:In a recent study, Kahn, Morrison and Wright showed that for exponentially distributed interpurchase times (of individuals), the household choice process approaches a zero-order process as the number of individuals in the household increases, even though the purchasing behavior of each individual is first order. We show that their result holds for any arbitrary interpurchase-time distribution that has a density over some interval. Thus, additional support is provided for their conclusion that the empirically observed zero-order choice behavior at the household level may not convey much information about individuals' choice behavior. We also derive a general formula that determines exactly the degree of dependence between two successive household purchases for any given family size and (well-behaved) interpurchase-time distribution.
ISSN:0377-2217
1872-6860
DOI:10.1016/0377-2217(94)90110-4