n Management Dynamics : Journal of the Southern African Institute for Management Scientists - Using Bayesian change-point models to assess changes in customer loyalty over time




A sequence of purchases (customer loyalty) may undergo sudden changes at unknown times. In this study we assess the extent of such change by developing a multiple change-point model that assumes that there is an underlying sequence of choice probabilities that govern the observed sequence of purchases, and that this sequence of probabilities can be partitioned into contiguous blocks such that the choice probabilities are equal within blocks but different between them. This model is fitted to panel data collected over a two-year period in seven consumer goods categories. Consistent with previous research on other types of changes in purchase behaviour, we find that the majority of consumers in our panel show little change in purchase probabilities over the medium-term, but that substantive and persistent changes are indicated for a significant minority of consumers.


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