The "Shopping Basket": A Model for Multicategory Purchase Incidence Decisions

Manchanda, Puneet; Ansari, Asim; Gupta, Sunil
June 1999
Marketing Science;1999, Vol. 18 Issue 2, p95
Academic Journal
Abstract Consumers make multicategory decisions in a variety of contexts such as choice of multiple categories during a shopping trip or mail-order purchasing. The choice of one category may affect the selection of another category due to the complementary nature (e.g., cake mix and cake frosting) of the two categories. Alternatively, two categories may co-occur in a shopping basket not because they are complementary but because of similar purchase cycles (e.g., beer and diapers) or because of a host of other unobserved factors. While complementarity gives managers some control over consumers' buying behavior (e.g., a change in the price of cake mix could change the purchase probability of cake frosting), co-occurrence or co-incidence is less controllable. Other factors that may affect multi-category choice may be (unobserved) household preferences or (observed) household demographics. We also argue that not accounting for these three factors simultaneously could lead to erroneous inferences. We then develop a conceptual framework that incorporates complementarity, co-incidence and heterogeneity (both observed and unobserved) as the factors that could lead to multi-category choice.We then translate this framework into a model of multi-category choice. Our model is based on random utility theory and allows for simultaneous, interdependent choice of many items. This model, the multivariate probit model, is implemented in a Hierarchical Bayes framework. The hierarchy consists of three levels. The first level captures the choice of items for the shopping basket during a shopping trip. The second level captures differences across households and the third level specifies the priors for the unknown parameters. We generalize some recent advances in Markov chain Monte Carlo methods in order to estimate the model. Specifically, we use a Substitution sampler which incorporates techniques such as the Metropolis Hit-and-Run algorithm and the Gibbs Sampler.The model is estima...


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