Dynamic Brand Satiation
36 Pages Posted: 8 Mar 2011 Last revised: 1 Mar 2012
Date Written: October 7, 2011
Abstract
A dynamic factor model of brand satiation is developed to explain longitudinal variation in consumer purchases. Factor loadings are associated with a brand’s position along a satiation dimension, and factor scores are associated with a household’s sensitivity to satiation effects. Dynamics are introduced by allowing the factor scores to evolve through time, reflecting variation in household satiation sensitivity. The factor model is imbedded within a direct utility model that allows for both corner and interior solutions, and is shown to fit the data better than alternative specifications. Analysis of a panel dataset of yogurt purchases indicates that household satiation is, in general, temporally accelerating. Implications for product line assortment are explored.
Keywords: Multiple Discreteness, Dynamic Satiation, Compensating Value, Factor Model, Bayesian Estimation
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