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Hruschka, Harald

Relevance of Functional Flexibility for Heterogeneous Sales Response Models: A Comparison of Parametric and Semi-Nonparametric Models

Article

Hruschka, Harald (2006) Relevance of Functional Flexibility for Heterogeneous Sales Response Models: A Comparison of Parametric and Semi-Nonparametric Models. European Journal of Operational Research 174 (2), pp. 1009-1020.

DOI to cite this document: 10.5283/epub.2092


Abstract

So far studies estimating sales response functions on the basis of store-specific data either consider heterogeneity or functional flexibility. That is why in this contribution a model is developed possessing both these features. It is a multilayer perceptron with store-specific coefficients which follows a hierarchical Bayesian framework. An appropriate Markov Chain Monte Carlo estimation ...

So far studies estimating sales response functions on the basis of store-specific data either consider heterogeneity or functional flexibility. That is why in this contribution a model is developed possessing both these features. It is a multilayer perceptron with store-specific coefficients which follows a hierarchical Bayesian framework. An appropriate Markov Chain Monte Carlo estimation technique is introduced capable to satisfy theoretical constraints (e.g. sign constraints
on elasticities). The empirical study refers to a data base consisting of weekly observations of sales and prices
for nine leading brands of a packaged consumer good category. The data were acquired in 81 stores over a time span of at least 61 weeks. The multilayer perceptron is compared to a strict parametric multiplicative model and turns out to be clearly superior in terms of posterior model probability. This result indicates the benefits of using a flexible model even if heterogeneity is dealt with. Estimated sales curves and elasticities demonstrate that both models differ with regard to implications on price response.



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Details

Item typeArticle
Journal or Publication TitleEuropean Journal of Operational Research
Volume174
Number of Issue or Book Chapter2
Page Rangepp. 1009-1020
DateOctober 2006
Date of publication05 Aug 2009 13:36
InstitutionsBusiness, Economics and Information Systems > Institut für Betriebswirtschaftslehre > Lehrstuhl für Marketing (Prof. Dr. Harald Hruschka)
KeywordsSales response; Hierarchical Bayes; Multilayer perceptron; Neural networks; Marketing
Dewey Decimal Classification300 Social sciences > 330 Economics
StatusPublished
RefereedYes, this version has been refereed
Created at the University of RegensburgYes
Item ID2092

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