A Multi-Category Customer Base Analysis

International Journal of Research in Marketing, 31 (3), 266-279 (2014)

Posted: 16 Apr 2013 Last revised: 6 Aug 2015

See all articles by Chang Hee Park

Chang Hee Park

Binghamton University, SUNY

Young-Hoon Park

Cornell University - Samuel Curtis Johnson Graduate School of Management

David A. Schweidel

McDonough School of Business, Georgetown University

Date Written: September 2014

Abstract

Customer base analysis is an essential tool to measure and develop relationships with customers. While various models have been proposed in a noncontractual setting, they focus primarily on analyzing transactional patterns associated with a single product category or a firm-level activity, such as the times at which purchases are made at a particular retailer. This research proposes a modeling framework for customer base analysis in a multi-category context. Specifically, we model the time between a customer's purchases at the firm and the product categories that comprise her shopping basket arising from multi-category choice decisions. The proposed model uses a latent space approach that parsimoniously captures the dynamics of multi-category shopping behavior due to the interplay between purchase timing and shopping basket composition. We also account for interdependence among multiple categories, temporal dependence across category choices, and latent customer attrition. Using category-level transaction data, we show that the proposed model offers excellent fit and performance in predicting customer purchase patterns across multiple categories. The forecasts and inferences afforded by our model can assist managers in tailoring marketing efforts across categories.

Keywords: Customer base analysis, Timing models, Multi-category choice models, Latent space models, Bayesian estimation

Suggested Citation

Park, Chang Hee and Park, Young-Hoon and Schweidel, David A., A Multi-Category Customer Base Analysis (September 2014). International Journal of Research in Marketing, 31 (3), 266-279 (2014), Available at SSRN: https://ssrn.com/abstract=2251280 or http://dx.doi.org/10.2139/ssrn.2251280

Chang Hee Park (Contact Author)

Binghamton University, SUNY ( email )

P. O. Box 6000
Binghamton, NY 13902-6000
United States

Young-Hoon Park

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853-6201
United States
(607) 255-3217 (Phone)

David A. Schweidel

McDonough School of Business, Georgetown University ( email )

Washington, DC 20057
United States

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