A Modified Linear Learning Model of Buyer Behavior
A stochastic model of individual buyer behavior is developed from a set of postulates about the buying process. The postulates are shown to imply a linear learning model modified by a term to explain response to pricing stimuli. Thus, a customer's purchasing probability is modelled as a combination of the effect of his past purchasing behavior plus the effect of price-variation in the market. Methods are developed to calculate short- and long-term probabilistic properties of the process. A method for parameter estimation is included. The model differs from past modelling efforts in this area in that a controllable variable, product price, is explicitly included in the model-structure, allowing the model to be used to aid in pricing decision making under a certain set of assumptions about competitive behavior in a market situation.
Year of publication: |
1974
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Authors: | Lilien, Gary L. |
Published in: |
Management Science. - Institute for Operations Research and the Management Sciences - INFORMS, ISSN 0025-1909. - Vol. 20.1974, 7, p. 1027-1036
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Publisher: |
Institute for Operations Research and the Management Sciences - INFORMS |
Saved in:
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