Blackberry Essay

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The Dirichlet is a well-established theoretical model that describes and predicts patterns of purchasing behavior in stationary markets. This paper uses data from a highly non-stationary market to demonstrate that the Dirichlet norms also provide a baseline to interpret change in purchasing behavior—in particular, change wrought by sustained promotional activity. The empirical analysis of industrial purchasing data describes how one supplier more than doubled its share of the market. This share increase was achieved by, first, securing a higher share of the category purchases made by heavy buyers (increasing purchase frequency) before adopting a more typical growth strategy of attracting more buyers (increasing penetration). The NBD-Dirichlet Model of brand choice and purchase incidence is a well-established theoretical statistical model. It has been shown to predict and explain observed patterns of purchasing behavior in a wide range of market situations (Uncles, Ehrenberg, and Hammond, 1995).The implications for advertisers of the law-like patterns embodied in the Dirichlet Model have been widely discussed, not least in this journal (Ehrenberg, 1974; Barnard and Ehrenberg, 1997; Ehrenberg, Barnard, Kennedy, and Bloom, 2002). In particular, for experienced buyers who routinely split their purchases between a repertoire of competing brands, advertising is mainly considered to reinforce existing habits and occasionally nudge buyers to widen their repertoire (Barnard and Ehrenberg, 1997). This view is borne out by evidence that, in most markets, brand shares remain static over time (Graham, 2009).For those cases where advertising and other factors do contribute to a more substantial change in purchasing behavior, however, the theoretical norms established by the Dirichlet Model provide a benchmark to interpret the observed before-and after scenarios (Ehrenberg,

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