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Using copulas to model repeat purchase behaviour - An exploratory analysis via a case study

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  • Meade, Nigel
  • Islam, Towhidul

Abstract

We develop a model of the evolution of inter-purchase times for a consumer-packaged product. After the introduction of the product, a consumer waits to make the initial purchase, then either waits to repurchase or decides not to. A repurchasing consumer repeats this decision process. The components of the model are the repurchase probability and the density function of the time to repurchase at each stage of the purchasing cycle. Issues of interest are: the strength of the dependency between successive repurchase times; the number of repeat purchases before stability occurs; the effects of consumer characteristics on inter-purchase times. The model of individual purchasing behaviour can be transformed via simulation to produce sales time series for a given population. As an example, the model is estimated for a product using Australian panel data. The accuracy of the model's prediction is compared with an existing model.

Suggested Citation

  • Meade, Nigel & Islam, Towhidul, 2010. "Using copulas to model repeat purchase behaviour - An exploratory analysis via a case study," European Journal of Operational Research, Elsevier, vol. 200(3), pages 908-917, February.
    • Handle: RePEc:eee:ejores:v:200:y:2010:i:3:p:908-917
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