Long run loyalty

Date of publication: November 1, 1996

Author: Philip Stern

Abstract:

This paper uses a continuous panel of doctors to analyse their portfolios (the number of drugs which are used) and how their prescribing decisions are spread across their portfolios. It reveals portfolios which are much larger, along with loyalty levels which are lower than those observed in prior studies in grocery markets. A doctor writing 100 prescriptions for any illness category will use about twelve different drugs and their favourite will account for about 40 prescriptions In grocery markets the portfolio sizes are typically reported as three brands, on average, with the favourite brand accounting for about 65% of consumers' category needs. The paper starts to reconcile these apparent differences in terms of variable rates of buying and proposes that the patterns in prescribing are likely to be a good long-term model for consumer markets.

Philip Stern

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