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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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 Creiators:
ISB Creators
Voleti, S
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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