Estimating Demand Heterogeneity Using Aggregated Data: An Application to the Frozen Pizza Category

Albuquerque, Paulo; Bronnenberg, Bart J.
March 2009
Marketing Science;Mar/Apr2009, Vol. 28 Issue 2, p356
Academic Journal
This paper combines different aggregate-level data sets to identify new product demand in consumer packaged goods (CPG) categories. Our approach augments market-level time-series data with widely available summaries of household purchase behavior, i.e., brand penetration and purchase set size data. We show that this augmentation is helpful in the estimation of consumer heterogeneity. For instance, observing a brand with relatively large shares and low penetration typically indicates that preferences are dispersed, with relatively few customers liking the brand a lot. Whereas the combination of share and penetration is informative about heterogeneity with realistic sample sizes, in isolation neither variable may lead to precise estimates of heterogeneity. In addition, other widely available data, e.g., category penetration, is helpful in estimating the size of the total market. Using a large Monte Carlo study, the paper demonstrates the benefits of the proposed approach in estimating model parameters, price elasticities, and brand switching. Empirically, the approach is used to evaluate the launch of a new national brand, DiGiorno, in the frozen pizza category. The new brand is inferred to be very successful at expanding the category, while avoiding cannibalization of existing company share. Using only standard information, i.e., market shares, to estimate the demand model leads, in our data, to poor estimates of the degree of consumer taste variation and of switching to a new brand.


Related Articles

  • Pizza is receiving more space, stronger support. Friedman, Michael // Frozen Food Age;Jan1997, Vol. 45 Issue 6, p28 

    Reports that manufacturers are devoting more space and stronger promotional support to frozen pizza. Comments from Dan Koch, general manager of Tony's Pizza Service of Marshall, Minnesota; How the results from a 1995 study by Information Resources Incorporated (IRI) spurred sales; Comments from...

  • Oft-repeated call: Pizza merits more space.  // Frozen Food Age;Aug97, Vol. 46 Issue 1, p16 

    States that frozen pizza is the fastest growing category in the frozen food department according to the study by Information Resources, Incorporated in Chicago. Percentage share of frozen food dollars; Categories which outpaced pizza in terms of household penetration; American state where the...

  • Heinz invests 5 million pounds in 'innovative' frozen pizza. Pendrous, Rick // Food Manufacture;Sep2001, Vol. 76 Issue 9, p14 

    Focuses on the investment of Heinz on a range of frozen pizza named Pizza-Pleasure in Great Britain. Innovations in the ingredients and processes; Variants of the product; Decline in the frozen mainmeal pizza sector despite growth in pizza restaurants.

  • DiGiorno Widens First Place Position in Pizza. Harrison, Dan // Frozen Food Age;Jul99, Vol. 47 Issue 12, p18 

    Offers information on the sales performance of the frozen pizza category in the United States. Kraft Pizza Company's DiGiorno brand; Pizza product introduced by Tombstone; VDK Frozen Foods' pizzas.

  • Let them eat pizza. Mogelonsky, Marcia // American Demographics;Mar95, Vol. 17 Issue 3, p10 

    Reports on the popularity of frozen pizza. Reasons for the popularity; Strong influence of young children and teenagers; Main patrons of frozen pizza.

  • Grab a Bigger Piece of the Pie. Canning, Kathie // Refrigerated & Frozen Foods Retailer;Aug2007, Vol. 5 Issue 7, p28 

    The article assesses the market share of frozen pizza in the U.S. Supermarket sales of frozen pizza increased by 4.6% for the 12 weeks ending July 15, 2007, according to data from Information Resources Inc. This trend could be affected by rise in prices of pizza ingredients, mainly cheese and...

  • We'd Swear/By This Pizza.  // Brandweek;1/7/2008, Vol. 49 Issue 1, p30 

    The article discusses how pizza delivery chain Domino's has added a 2008 menu item called "BFD," which stands for "Big Fantastic Deal." The "BFD" comes with all the pizza toppings a customer can put on a pizza and its $10.99. The article points out that the acronym "BFD" is also know as...

  • Still Rising.  // Snack Food & Wholesale Bakery;May2002, Vol. 91 Issue 5, p24 

    Reports on the approach used by Kraft Foods Inc. in marketing new products and for expanding the sales of its pizza brands. Marketing slogan of the company for its pizza products; Statement from Kevin Ponticelli, executive vice president and general manager of Kraft Cheese; Annual sales...

  • Innovations & Opportunities. Hartnett, Michael // Frozen Food Age;Oct2005, Vol. 54 Issue 3, p36 

    This article introduces innovations on pizza products in response to what the consumer wants and needs in the U.S. Leading brands in frozen pizza, along with several specialty brands, are responding to an ever-growing list of consumer demands for more choices in crusts and toppings, convenience,...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics