By Dennis Fox
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Extra info for Advanced econometric marketing models
Such an approach could turn out to be useful in a category in which expansion eﬀects play an important role. However, in a sales model, one needs to model seasonal eﬀects and the category expansion or category contraction explicitly. In order to analyze changes in actual behavior of a brand manager, that is, changes in the use of instruments like price and display, one needs methods to test for structural changes in time series variables. Upon doing so, we build on the ﬁndings in Srinivasan et al.
In that case, the test concerns β˜kji = β˜kji , i = 2, . . , I − 1 and j = 2, . . , I for a speciﬁc marketing instrument k. Finally, we can test for constant variance of the unexplained attractions of the incumbent brands. As stated before, the covariances can be interpreted as measuring the similarity of brands. Testing for the constancy of the covariance structure can therefore be interpreted as testing for constancy of the overall brand positioning. 4 Testing for shifts 47 To test the various hypotheses, we rely on the Likelihood Ratio [LR] test principle.
Key issues that we have discussed are model selection and forecasting. We have shown that the commonly applied forecasting method yields biased forecasts and that the use of a systematic model selection procedure can further enhance the performance of an empirical model. There are a few more issues that we feel need concern. First of all, one may want to allow for the event of new brands entering the market or old brands leaving it. In Chapter 3 we discuss techniques for doing so. Another area of research involves the analysis of possibly diﬀering short-run and long-run eﬀects of marketing eﬀorts, see Dekimpe and Hanssens (1995b) and Paap and Franses (2000), among others.