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An Artificial Neural Net Attraction Model (Annam) To Analyze Market Share Effects Of Marketing Instruments

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  • Harald Hruschka

Abstract

Attraction models are very popular in marketing research for studying the effects of marketing instruments on market shares. However, so far the marketing literature only considers attraction models with certain functional forms that exclude threshold or saturation effects on attraction values. We can achieve greater flexibility by using the neural net based approach introduced here. This approach assesses brands’ attraction values by means of a perception with one hidden layer. The approach uses log-ratio transformed market shares as dependent variables. Stochastic gradient descent followed by a quasi-Newton method estimates parameters. For store-level data, neural net models perform better and imply a price response that is qualitatively different from the well-known multinomial logit attraction model. Price elasticities of neural net attraction models also lead to specific managerial implications in terms of optimal prices.

Suggested Citation

  • Harald Hruschka, 2001. "An Artificial Neural Net Attraction Model (Annam) To Analyze Market Share Effects Of Marketing Instruments," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 53(1), pages 27-40, January.
    • Handle: RePEc:sbr:abstra:v:53:y:2001:i:1:p:27-40
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    Cited by:

    1. Hruschka, Harald, 2006. "Relevance of functional flexibility for heterogeneous sales response models: A comparison of parametric and semi-nonparametric models," European Journal of Operational Research, Elsevier, vol. 174(2), pages 1009-1020, October.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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