Dynamic Changepoints Revisited: An Evolving Process Model of New Product Sales

International Journal of Research in Marketing, Vol. 26, No. 2, 2009

21 Pages Posted: 30 May 2005 Last revised: 4 Apr 2012

See all articles by David A. Schweidel

David A. Schweidel

McDonough School of Business, Georgetown University

Peter Fader

University of Pennsylvania - Marketing Department

Date Written: November 1, 2008

Abstract

This paper posits a new framework to model the trial of and repeat purchasing of a new product. While much research has examined underlying shifts in consumer purchasing patterns, the typical assumption has been that the underlying purchasing process remains the same although the purchasing rates may change over time. Motivated by Fader, Hardie, and Huang's development of a dynamic changepoint model (2004), we consider an evolving process as consumers gain more experience with a new product.

Our framework assumes that consumers progress through two purchasing states, becoming more regular in their inter-purchase times as they gain experience with the product through repeat purchases. More specifically, they move from an initial state of exponential purchasing to a "steady state" that is characterized by a more regular Erlang-2 timing distribution. The proposed model is very flexible and nests a number of existing models, enabling it to explain a wide range of observed behavioral patterns. We apply our evolving process model to the same datasets used by Fader, Hardie, and Huang (2004) and compare our results to a number of competing models. We find empirical evidence to support the use of a two-state model, since it yields relevant insights as well as improved empirical performance. We discuss the implications as they relate to forecasting new product sales.

Keywords: New Products, Nonstationarity, Changepoint models, Duration models

Suggested Citation

Schweidel, David A. and Fader, Peter, Dynamic Changepoints Revisited: An Evolving Process Model of New Product Sales (November 1, 2008). International Journal of Research in Marketing, Vol. 26, No. 2, 2009, Available at SSRN: https://ssrn.com/abstract=729869 or http://dx.doi.org/10.2139/ssrn.729869

David A. Schweidel (Contact Author)

McDonough School of Business, Georgetown University ( email )

Washington, DC 20057
United States

Peter Fader

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

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