A consumer purchasing model with learning and departure behaviour

Abstract

The purpose of this paper is to extend the model of negative binominal distribution used in consumer purchasing models so as to incorporate the consumer's learning and departure behaviours. The regularity of interpurchase time and its unobserved heterogeneity are also included. Due to these extensions, this model can be used to determine during a given period how many purchases are made by an experienced or an inexperienced customer. This model also allows the determination of the probability that a customer with a given pattern of purchasing behaviour still remains, or has departed, at any time after k≥1 purchases are made. An illustration of the approach is conducted using consumer purchase data for tea. As assessed by comparing results with Theil's U, the integrated model developed gives the best results and shows that learning and departure are important factors which influence consumer's purchase behaviour, especially, when evaluating the behaviour of inexperienced customers.

Keywords:

• customer purchasing
• interpurchase time
• learning
• purchase behaviour