Semiparametric Stepwise Regression to Estimate Sales Promotion Effects
Kalyanam and Shively (1998) and van Heerde et al. (2001) have proposed semiparametric models to estimate the influence of price promotions on brand sales, and both obtained superior performance for their models compared to strictly parametric modeling. Following these researchers, we suggest another semiparametric framework which is based on penalized B-splines to analyze sales promotion effects flexibly. Unlike these researchers, we introduce a stepwise procedure with simultaneous smoothing parameter choice for variable selection. Applying this stepwise routine enables us to deal with product categories with many competitive items without imposing restrictions on the competitive market structure in advance. We illustrate the new methodology in an empirical application using weekly store-level scanner data.
KeywordsProduct Category Semiparametric Model Sales Promotion Price Promotion Start Model
Unable to display preview. Download preview PDF.
- BLATTBERG, R.C. and GEORGE, E.I. (1991): Shrinkage Estimation of Price and Promotional Elasticities. Journal of the American Statistical Association, 86(414), 304–315.Google Scholar
- DE BOOR, C. (1978): A Practical Guide to Splines. Springer, New York.Google Scholar
- FOEKENS, E.W. (1995): Scanner Data Based Marketing Modelling: Empirical Applications. Labyrinth Publications, The Netherlands.Google Scholar
- HANSSENS, D.M., PARSONS L.J. and SCHULTZ, R.L. (2001): Market Response Models: Econometric and Time Series Analysis. Chapman & Hall, London.Google Scholar
- HASTIE, T. and TIBSHIRANI, R. (1990): Generalized Additive Models. Chapman & Hall, London.Google Scholar
- HRUSCHKA, H. (2004): Relevance of Functional Flexibility for Heterogeneous Sales Response Models. A Comparison of Parametric and Seminonparametric Models. Discussion Paper 394, Faculty of Economics, University of Regensburg.Google Scholar
- KALYANAM, K., SHIVELY, T.S. (1998): Estimating Irregular Pricing Effects: A Stochastic Spline Regression Approach. Journal of Marketing Research, 35(1), 16–29.Google Scholar
- MONTGOMERY, A.L. (1997): Creating Micro-Marketing Pricing Strategies Using Supermarket Scanner Data. Marketing Science, 16(4), 315–337.Google Scholar
- VAN HEERDE, H.J., LEEFLANG, P.S.H. and WITTINK, D.R. (2001): Semiparametric Analysis to Estimate the Deal Effect Curve. Journal of Marketing Research, 38(2), 197–215.Google Scholar
- VAN HEERDE, H.J., LEEFLANG, P.S.H. and WITTINK, D.R. (2002): How Promotions Work: SCAN*PRO-Based Evolutionary Model Building. Schmalenbach Business Review, 54(3), 198–220.Google Scholar