Title: Competition and cooperation between brands in a segment: an analysis based on a semi-Markov model

Authors: Rong Du, Shizhong Ai, Qiying Hu

Addresses: School of Economics and Management, Xidian University, Xian, Shaanxi 710071, China. ' School of Economics and Management, Xidian University, Xian, Shaanxi 710071, China. ' School of Management, Fudan University, Shanghai 201800, China

Abstract: Because the market position of a product brand is influenced by consumers| buying behaviour, it is important to identify the potential for competition and cooperation between different brands in a product category by using consumer behaviour analysis. To help marketing managers discover the market positions of their brands and to make decisions about competitive or cooperative strategies, we propose an integrated semi-Markov model for consumer behaviour, which combines brand choice, purchase quantity and purchase timing. Based on the model, we mathematically formulate some measures for consumer behaviour and describe a brand|s market structure in a new way using semi-Markov processes. The brand|s market in the presented structure is classified into one transient segment and several recurrent segments, which can be further classified into loyal segments and switching segments. With the help of this brand|s market structure, we analyse the coexistence of competition and cooperation among different brands. To validate the model, we conducted an experiment using the data from a consumer panel of college students.

Keywords: semi-Markov model; services sciences; market segments; competition; cooperation; product brands; consumer behaviour; behaviour analysis; marketing; branding; loyal segments; switching segments; brand loyalty.

DOI: 10.1504/IJSSCI.2009.021962

International Journal of Services Sciences, 2009 Vol.2 No.1, pp.70 - 82

Published online: 11 Dec 2008 *

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