A Model of Heterogeneous Multicategory Choice for Market Basket Analysis
AbstractBased on market basket data, multicategory purchase incidence models analyze demand interdependencies between product categories. We propose a finite mixture multivariate logit model to derive segment-specific intercategory effects of market basket purchase. Under the assumption that only a fraction of intercategory effects are significant, we exclude irrelevant effects by variable selection. This leads to a detailed description of consumers' shopping behavior that varies over segments not only w.r.t. parameters' values but also w.r.t. included interaction effects. We find that a homogeneous model would overestimate the intensity of interaction between product categories.
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Bibliographic InfoPaper provided by University of Regensburg, Department of Economics in its series University of Regensburg Working Papers in Business, Economics and Management Information Systems with number 456.
Date of creation: 19 Apr 2011
Date of revision:
Marketing; market basket analysis; finite mixture model; variable selection; multivariate logistic regression; pseudo likelihood estimation; maximum likelihood approximation; multicategory purchase incidence models;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-DCM-2011-04-30 (Discrete Choice Models)
- NEP-MKT-2011-04-30 (Marketing)
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