Despite the abundance of advertisement and price promotion in marketing, consumption choices often rely just as heavily on personal taste. We compare the conventional Multinomial Logit discrete choice model, with a Mixed Logit specification, as to ascertain whether consumers behave hetero- or homogeneously. We consider both Multivariate Normal and discrete distributions for model parameters. Model performance is measured by in-sample information criteria, as well as out-of-sample forecasting performance. We find strong evidence of preference heterogeneity in both a product marketing setting, as well as a discrete choice survey experiment. By incorporating a Guadagni and Little (1983) loyalty variable, we extend this result to a dynamic choice setting, finding residual preference heterogeneity, even when brand loyalty is accounted for.

Additional Metadata
Thesis Advisor Castelein, A.
Persistent URL hdl.handle.net/2105/43260
Series Econometrie
Citation
Nijs, C.P.F. de. (2018, September 5). Accounting for Taste. Econometrie. Retrieved from http://hdl.handle.net/2105/43260