Decision Sciences Journal
Volume 32, Number 3
Summer 2001
Utility-consistent Brand Demand Systems with Endogenous Category
Consumption: Principles and Marketing Applications
George Baltas
Athens University of Economics and Business, 76 Patission Avenue,
Athens 10434, Greece, email: gb@aueb.gr
ABSTRACT. This paper introduces the design and implementation
of utility-consistent, brand, and category demand systems. It
extends formal demand analysis to the area of brand and category
demand, which directly concerns marketing researchers and managers.
The proposed brand demand system is a set of interrelated demand
functions that are derived explicitly from a utility function
describing consumer preferences. The model generalizes by the
integration of category expenditures, which are determined endogenously.
The theoretical plausibility of the proposed demand model is
demonstrated first and, subsequently, brand and category level
systems are derived. Econometric methods for estimating the systems
are also developed and illustrated in empirical data. The results
yield empirically determined, quantitative insights into the
structure of consumer demand for brands and product categories.
The proposed approach has the attractive feature of structuring
the interdependencies of consumer decisions and ensuring an explicit
role for theory in applied research.
Subject Areas: Brand Management, Category Demand, Consumer
Behavior, Demand Systems, Duality, Economic Analysis, Marketing
Models, Marketing Research, and Nonlinear Regression. |