The present paper describes the devices adopted in order to construct the transition matrix which is going to serve as the model's input : they involve breaking down each purchasing sequence into pairs of elementary purchases. But this in turn created a new series of difficulties : the aggregating of unequal intervals between purchases, the impossibility of retracing an individual loyalty to a brand from repurchasing rates. The proposed solution consists of segmenting the market according to two dimensions that emerge from the Markov mechanism -purchasing intensity, and loyalty which also prove very instructive as far as marketing is concerned . The experiments carried out on two non-durable consumer product markets consisted of comparing predicted shares with actual shares over a period of three years, and enabled us to define the degree of reliability of the model.
The present paper describes the devices adopted in order to construct the transition matrix which is going to serve as the model's input : they involve breaking down each purchasing sequence into pairs of elementary purchases. But this in turn created a new series of difficulties : the aggregating of unequal intervals between purchases, the impossibility of retracing an individual loyalty to a brand from repurchasing rates. The proposed solution consists of segmenting the market according to two dimensions that emerge from the Markov mechanism -purchasing intensity, and loyalty which also prove very instructive as far as marketing is concerned . The experiments carried out on two non-durable consumer product markets consisted of comparing predicted shares with actual shares over a period of three years, and enabled us to define the degree of reliability of the model.
The aim of this work is ''building out" the simple Markovian model in a more realistic direction assuming that the time between sequencial purchases is variable. To study the complete relationship between "the marketing input variables" and brand transition, the author proposed to drop completely the analytical solution and instead construct a semi-mathematical model based on the use of an electronical computer. The solution has the following characteristics: 1. Each cell in the transition matrix is a function of series of marketing input variables. The type of function is proposed to be trigonometrical series. As a result of the transition matrix has to be dynamic (varying with time). The author is also discussing the interviewing methods by means of which one can collect the data-material for.
The present stage you can characterise as initial stage of research work. In our opinion it will be necessary to use stochastic processes in the analysis of brand-switching.
In Group 1 the discussion of brand switching was centred first on whether or not Markov chains were a useful concept in this area.
The usefulness of the Markov chains was of course discussed with the two speakers; they had actually adopted very different positions on that point.
On the first place, it has to be said that the group members consider it as a jolly good idea to observe the purchasing habits over quite long periods of time instead of making conclusions based on elementary purchasing behaviour. But they regret that the authors have not (or not yet) studied the relationship between the duplications and the D coefficients observed for specified pairs of brands during successive periods. It could be an interesting direction for research to analyse these data on the way it has been done with elementary purchases when applying Markovian processes.
One question which has been raised in the discussion is that of assessing a manufacturer's scope for launching an additional brand in a product-field instead of simply pushing his existing brand. This is in fact one of several kinds of practical application of the results which are already being actively pursued. It links up with the more general topic of studying buyer behaviour for aggregates of brands. This has specific applications not only for judging the scope for additional upper sales limits of existing brands and for assessing the role of house-names, but also provides a link with macro-economics.