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A Market Basket Analysis Conducted with a Multivariate Logit Model

  • Yasemin Boztug
  • Lutz Hildebrandt

The following research is guided by the hypothesis that products chosen on a shopping trip in a supermarket can indicate the preference interdependencies between different products or brands. The bundle chosen on the trip can be regarded as the result of a global utility function. More specifically: the existence of such a function implies a cross-category dependence of brand choice behavior. It is hypothesized that the global utility function related to a product bundle results from the marketing-mix of the underlying brands. Several approaches exist to describe the choice of specific categories from a set of many alternatives. The models are discussed in brief; the multivariate logit approach is used to estimate a model with a German data set.

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Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2005-028.

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Length: 11 pages
Date of creation: May 2005
Date of revision:
Handle: RePEc:hum:wpaper:sfb649dp2005-028
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  1. J. A. Hausman & D. A. Wise, 1976. "A Conditional Profit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Working papers 173, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Karsten Hansen & Vishal Singh & Pradeep Chintagunta, 2006. "Understanding Store-Brand Purchase Behavior Across Categories," Marketing Science, INFORMS, vol. 25(1), pages 75-90, 01-02.
  3. Andrew Ainslie & Peter E. Rossi, 1998. "Similarities in Choice Behavior Across Product Categories," Marketing Science, INFORMS, vol. 17(2), pages 91-106.
  4. Joel Levine, 1979. "Joint-space analysis of “pick-any” data: Analysis of choices from an unconstrained set of alternatives," Psychometrika, Springer, vol. 44(1), pages 85-92, March.
  5. Bouthelier, Fernando & Daganzo, Carlos F., 1979. "Aggregation with multinomial probit and estimation of disaggregate models with aggregate data: A new methodological approach," Transportation Research Part B: Methodological, Elsevier, vol. 13(2), pages 133-146, June.
  6. Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
  7. Puneet Manchanda & Asim Ansari & Sunil Gupta, 1999. "The “Shopping Basket”: A Model for Multicategory Purchase Incidence Decisions," Marketing Science, INFORMS, vol. 18(2), pages 95-114.
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