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.
The two approaches had been introduced as alternatives. As such, the group agreed with Ehrenberg & Goodhardt's approach. They did, so on purely practical grounds . The crucial drawback seen in Hamre's approach was that the number of constants or coefficients to be fitted from the data kept increasing. The group felt that this would lead to instability under sampling variation.
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.