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Equilibrium Stochastic Choice and Market Penetration Theories: Derivations and Comparisons

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  • Frank M. Bass

    (Purdue University)

  • Abel Jeuland

    (Purdue University)

  • Gordon P. Wright

    (Purdue University)

Abstract

We show in this paper the formal connection between brand switching models and multiperiod analysis of brand choice behavior. A formal, well-defined stochastic process is developed from stochastic choice premises which permits analysis of any event or combination of events in terms of subsets of the market. The formal connection between single-brand analysis and multi-brand analysis is demonstrated. The parameters of the stochastic process involve the market shares and a measure of the heterogeneity of the population. This information is sufficient to permit the estimation of aggregate brand switching on adjacent trials or brand penetration and multiple brand purchasing over sequences of purchase occasions.

Suggested Citation

  • Frank M. Bass & Abel Jeuland & Gordon P. Wright, 1976. "Equilibrium Stochastic Choice and Market Penetration Theories: Derivations and Comparisons," Management Science, INFORMS, vol. 22(10), pages 1051-1063, June.
    • Handle: RePEc:inm:ormnsc:v:22:y:1976:i:10:p:1051-1063
    DOI: 10.1287/mnsc.22.10.1051
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    Cited by:

    1. Silk, Alvin J. & Urban, Glen L., 1976. "Pre-test market evaluation of new packaged goods : a model and measurement methodology," Working papers 834-76., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. LAURENT, Gilles & RUNGIE, Cam & DALL'OLMO RILEY, Francesca & MORRISON, Donald G. & ROY, Tirthankar, 2001. "Measuring and modeling the (limited) consistency of free choice attitude questions," HEC Research Papers Series 735, HEC Paris.
    3. Elrod, Terry & Keane, Michael, 1995. "A Factor-Analytic Probit Model for Representing the Market Structure in Panel Data," MPRA Paper 52434, University Library of Munich, Germany.
    4. Byong‐Duk Rhee & André de Palma & Claes Fornell & Jacques‐François Thisse, 1992. "Restoring The Principle Of Minimum Differentiation In Product Positioning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(3), pages 475-505, September.
    5. Pradeep K. Chintagunta, 1999. "Variety Seeking, Purchase Timing, and the "Lightning Bolt" Brand Choice Model," Management Science, INFORMS, vol. 45(4), pages 486-498, April.

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