Marketing Letters

, Volume 6, Issue 3, pp 199–210 | Cite as

A nested logit model of brand choice incorporating variety-seeking and marketing-mix variables

  • Asim Ansari
  • Kapil Bawa
  • Ayijit Ghosh
Article

Abstract

We model the effects of variety-seeking and marketing-mix variables on consumers' purchases of coffee using a nested logit model. We premise that on any given purchase occasion, the utilities of brands other than the one purchased on the previous occasion may be correlated due to the consumer's tendency to seek variety or to avoid variety. This results in a two-level hierarchical model where choice on any purchase occasion is conditioned on the brand purchased on the immediately preceding occasion. Such a structure accounts for variety seeking and inertia tendencies of consumers and is consistent with a hierarchical decision process, where consumers first decide whether or not to make a repeat purchase and then decide which brand size to purchase. The assumed hierarchical structure is shown to be consistent with observed coffee purchase behavior, and the model is shown to outperform a nonhierarchical logit model in predicting consumers' brand choices.

Key words

Variety-seeking marketing mix nested logit brand choice 

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Asim Ansari
    • 1
  • Kapil Bawa
    • 2
  • Ayijit Ghosh
    • 3
  1. 1.University of British ColumbiaUSA
  2. 2.McGill UniversityUSA
  3. 3.Stern School of BusinessNew York UniversityNew York

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