• Incorporating Market Share Forecasting with Consumer Brand Switching Behavior

Abstract

The theoretical model developed by this paper is based on logit model for consumer brand switching probability and on the Markov model for market share forecasting. For policy-making point of view, the precise modeling of the consumer brand switching probability and market share forecasting. Moreover, the panel data (vs. questionnaire) used by empirical study of this paper could further capture the “true” consumption behavior. The results of this empirical study show that: first, the more promotion does the consumer participate, the longer the duration he is. Therefore, the marketing manager should focus on increasing customer’s participation probability. Second, consumer “location” and “consumer promotion participation” play intervening roles in duration time. Therefore, the manager should make efforts on the high participation -urban customers and lower participation -rural customers to effectively increase their duration time. Third, the Markov-Logit model developed by the paper could preciously forecast the next three periods market share resulting in are 0.0453, 0.0751, and 0.0880, respectively.

Keywords: Brand switching, Mobile phone, Markov model, Logit model