Modelling competition between and within genres of consumer goods; an application in charitalbe giving

The main goal of this paper is to develop a model that can be used to get insight in the competition between and within genres of consumer goods. A genre of consumer goods can be defined as a group of products that operate in the same product category and have the same objective. The model we propose is a model that is based on a two-level constant elasticity of substitution function. With this function we can look at the competition between genres and within genres. With the combination of this utility function and latent class modelling we can distinguish individuals with different types of behavior. This model will be applied on data about charitable giving. We have data of eleven different charities that operate in three different genres. In this analysis we find that we can say that individuals differ in their behavior in donating to charities, because our model with four latent classes has more explaining power than the model with no latent classes or two or three classes. We found that there are at least four different types of behavior. There are two classes that are very big and they look almost the same, so there are a lot of individuals in the same class. In these two classes the genre healthcare is more important for individuals, in the third class the genre healthcare is less important. In the fourth class people donate more to charities, than in the other classes, because they care less about the money they have left for other things. The model we developped in this paper can be used to distinguish different types of behavior.