Measuring Changes In Brand Choice Behavior

The multinomial logit model is frequently used in marketing research to explain consumers’ brand choice decisions. In almost all applications of this model, the parameters of the consumers’ utility function are assumed to be constant across time. In contrast to this assumption, both marketing theory and statements from marketing practitioners suggest the possibility of short-term fluctuations and long-term changes in consumers’ brand choice behavior. In this paper, nonparametric brand-specific time-variable functions replace the brand-specific constants usually found in brand choice models. I estimate the model for panel data from two product categories and derive management implications.