Consumer behavioural evolvement, behavioural segmentation, promotion, exploration and exploitation, retailing, store scanner data.
Consumers treat and react to promotions diversely in terms of their promotion proneness and variety seeking tendency. This paper investigates 589 consumers with 169678 transaction records in the US salt-snack market ranging from year 4 to year 7 in IRI Market Dataset for exploring how their purchase behaviours evolve in the consumer life cycle. A set of algorithms is presented to process store scanner data for measuring consumersâ€™ promotion proneness and variety seeking tendency, which are then used for conducting clustering analysis. Four types of purchase behaviours including â€œPromotion averseâ€, â€œBargain huntersâ€, â€œOpportunistic explorersâ€, and â€œOpportunistic exploitersâ€ are identified and assigned accordingly for each consumer in each year. Even though consumersâ€™ purchase behaviours will dynamically and freely shift within or among those four behavioural segments over time, two clear behavioural evolvement patterns can be identified statistically in the consumer life cycle. In the US salt-snack market, some consumers who are initially not sensitive to promotions will gradually evolve to take advantage of promotion to try alternatives for extending their market knowledge. Some explorersâ€™ promotion proneness will gradually increase and outweigh their variety seeking tendency over time, thus, those opportunistic explorers become inclined to buy any brands on promotion. In contrast, consumers who initially prefer to buy their familiar brands will become m
Full Text : PDF
- Audibert, J. Y., Munos, R., and Szepesv´ari, C. (2009) Exploration-exploitation trade-off using variance estimates in multi-armed bandits. Theoretical Computer Science. 410. p. 1876-1902.
- Babej, M. E., and Pollak, T. (2007) In-store advertising: Coming of age? [Online] Available from : http://www.forbes.com/2007/10/29/unsolicited-advice-supermarkets oped_meb_1030advice.html [Accessed: 10 June 2014]
- Cerrito, P. B. (2005). Comparison of Enterprise Miner and SAS/Stat for data mining. Louisville: SAS Institute Inc.
- Che, H., Erdem, T., and Öncü , T. (2013) Consumer learning and evolution of consumer brand preferences. Pennsylvania: University of Pennsylvania.
- Chen, J. (2004) Generalized entropy theory of information and market patterns. Corporate Finance Review. p. 23-32.
- Collica, R. S. (2011). Customer segmentation and clustering using SAS Enterprise Miner. 2nd Ed. Cary: SAS Institute Inc.
- Erdem, T., and Keane, M. P. (1996) Decision-making under uncertainty: Capturing dynamic brand choice processes in turbulent consumer goods markets. Marketing Science. 15(1). p. 1-20.
- Gupta, A. K., Smith, K. G., and Shalley, C. E. (2006) The interplay between exploration and exploitation. Academy of Management Journal. 49(4). p. 693–706.
- Gilbert, D. C., and Jackaria, N. (2002) The efficacy of sales promotions in UK supermarkets: A consumer view. International Journal of Retail & Distribution Management. 30(6). p. 315-322.
- Heilman, C. M., Bowman, D., and Wright, G. P. (2000) The evolution of brand preferences and choice behaviors of consumers new to a market. Journal of Marketing Research. 37(2). p. 139-155.
- Lodorfos, G. N., Mulvana, K. L., and Temperley, J. (2006) Consumer behaviour: Experience, price, trust and subjective norms in the OTC pharmaceutical market. Innovative Marketing. 2(3). p. 41-66.
- SAS Institute Inc. (1999) SAS/STAT user's guide. The FASTCLUS Procedure. Cary: SAS Institute Inc.
- Teunter, L. H. (2002) Analysis of sales promotion effects on household purchase behavior. A Thesis Submitted in partial fulfilment of the Requirements of Erasmus University for the Degree of Doctor of Philosophy. Rotterdam: Erasmus University.