A Multimarket Analysis of Inter-dependent Consumer Response Sensitivities

Voleti, S (2015) A Multimarket Analysis of Inter-dependent Consumer Response Sensitivities. Review of Marketing Science.

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Abstract

We investigate variation in aggregate consumer response sensitivities to the price, promotion and distribution elements of the marketing mix across US metropolitan markets. Primarily, three questions of research interest are examined – (i) the nature of the relationship between different aggregate response sensitivities and the implications therein, (ii) the usefulness of aggregate area-wide macroeconomic indicators such as inflation, unemployment and poverty in the context of a marketing problem, and (iii) the usefulness of geo-spatial information under a distribution-free approach. Beer category sales data across 49 major US metropolitan markets are analyzed. We find a pattern of strong inter-dependence among aggregate response sensitivities that indicates the existence of distinct, non-overlapping consumer segments. This enables a characterization of metropolitan market areas at an aggregate level. Ignoring inter-dependence mis-characterizes response sensitivity in two-thirds of the markets sampled. Further, on a standalone basis, neither area-wide economic indicators nor geo-spatial information help the analysis, but in conjunction, they vastly improve model fit (by almost 40%), explained variance (by over twice), parameter significance and consequently, insight.

ISB Creators:
ISB CreatorsORCiD
Voleti, SUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: response sensitivity; simultaneous equation models; spatial analysis; economic indicators; instrumental variables
Subjects: Marketing
Depositing User: LRC ISB
Date Deposited: 15 Apr 2015 08:06
Last Modified: 15 Apr 2015 08:06
URI: http://eprints.exchange.isb.edu/id/eprint/383
Publisher URL: http://dx.doi.org/10.1515/roms-2013-0013
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/1546-5616/
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