IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Semiparametric analysis to estimate the deal effect curve

  • Heerde, Harald J. van
  • Leeflang, Peter S.H.
  • Wittink, Dick R.

    (Groningen University)

Registered author(s):

    The marketing literature suggests several phenomena that may contribute to the shape of the relationship between sales and price discounts. These phenomena can produce severe nonlinearities and interactions in the curves, and we argue that those are best captured with a flexible approach. Since a fully nonparametric regression model suffers from the curse of dimensionality, we propose a semiparametric regression model. Store-level sales over time is modeled as a nonparametric function of own-and cross-item price discounts, and a parametric function of other predictors (all indicator variables). We compare the predictive validity of the semiparametric model with that of two parametric benchmark models and obtain better performance on average. The results for three product categories indicate a.o. threshold- and saturation effects for both own- and cross-item temporary price cuts. We also show how the own-item curve depends on other items’ price discounts (flexible interaction effects). In a separate analysis, we show how the shape of the deal effect curve depends on own-item promotion signals. Our results indicate that prevailing methods for the estimation of deal effects on sales are inadequate.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://irs.ub.rug.nl/ppn/188209867
    Download Restriction: no

    Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 99B35.

    as
    in new window

    Length:
    Date of creation: 1999
    Date of revision:
    Handle: RePEc:dgr:rugsom:99b35
    Contact details of provider: Postal: PO Box 800, 9700 AV Groningen
    Phone: +31 50 363 7185
    Fax: +31 50 363 3720
    Web page: http://som.eldoc.ub.rug.nl/Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Wolfgang HÄRDLE & O. LINTON, 1995. "Nonparametric Regression," SFB 373 Discussion Papers 1995,29, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    2. Hardle, W., 1992. "Applied Nonparametric Methods," Papers 9204, Catholique de Louvain - Institut de statistique.
    3. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
    4. repec:cup:cbooks:9780521429504 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:dgr:rugsom:99b35. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joke Bulthuis)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.