IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v31y2001i3_supplementps94-s107.html
   My bibliography  Save this article

Forecasting Repeat Sales at CDNOW: A Case Study

Author

Listed:
  • Peter S. Fader

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6371)

  • Bruce G. S. Hardie

    (London Business School, Regent's Park, London NW1 4SA, United Kingdom)

Abstract

We conducted a modeling exercise in conjunction with the online music retailer CDNOW to develop a simple stochastic model of buyer behavior capable of forecasting medium-term aggregate CD purchasing by a cohort of new customers. We modeled weekly sales using a finite mixture of beta-geometric distributions with a separate time-varying component to capture nonstationarity in repeat buying. The resulting model can easily be implemented within a standard spreadsheet environment (for example, Microsoft Excel). It does a good job of describing the underlying sales patterns and produces an excellent medium-term forecast.

Suggested Citation

  • Peter S. Fader & Bruce G. S. Hardie, 2001. "Forecasting Repeat Sales at CDNOW: A Case Study," Interfaces, INFORMS, vol. 31(3_supplem), pages 94-107, June.
    • Handle: RePEc:inm:orinte:v:31:y:2001:i:3_supplement:p:s94-s107
    DOI: 10.1287/inte.31.3s.94.9683
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.31.3s.94.9683
    Download Restriction: no
    File URL: https://libkey.io/10.1287/inte.31.3s.94.9683?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Morrison, Donald G & Schmittlein, David C, 1988. "Generalizing the NBD Model for Customer Purchases: What Are the Implications and Is It Worth the Effort?," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(2), pages 145-159, April.
    2. Morrison, Donald G & Schmittlein, David C, 1988. "Generalizing the NBD Model for Customer Purchases: What Are the Implications and Is It Worth the Effort? Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(2), pages 165-166, April.
    3. David C. Schmittlein & Donald G. Morrison & Richard Colombo, 1987. "Counting Your Customers: Who-Are They and What Will They Do Next?," Management Science, INFORMS, vol. 33(1), pages 1-24, January.
    4. David C. Schmittlein & Robert A. Peterson, 1994. "Customer Base Analysis: An Industrial Purchase Process Application," Marketing Science, INFORMS, vol. 13(1), pages 41-67.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zan Huang & Daniel D. Zeng & Hsinchun Chen, 2007. "Analyzing Consumer-Product Graphs: Empirical Findings and Applications in Recommender Systems," Management Science, INFORMS, vol. 53(7), pages 1146-1164, July.
    2. Romero, Jaime & van der Lans, Ralf & Wierenga, Berend, 2013. "A Partially Hidden Markov Model of Customer Dynamics for CLV Measurement," Journal of Interactive Marketing, Elsevier, vol. 27(3), pages 185-208.
    3. Shi, Ruixia & Chen, Hongyu & Sethi, Suresh P., 2019. "A generalized count model on customers' purchases in O2O market," International Journal of Production Economics, Elsevier, vol. 215(C), pages 121-130.
    4. Peter S. Fader & Bruce G. S. Hardie & Ka Lok Lee, 2005. "“Counting Your Customers” the Easy Way: An Alternative to the Pareto/NBD Model," Marketing Science, INFORMS, vol. 24(2), pages 275-284, August.
    5. Michael Platzer & Thomas Reutterer, 2016. "Ticking Away the Moments: Timing Regularity Helps to Better Predict Customer Activity," Marketing Science, INFORMS, vol. 35(5), pages 779-799, September.
    6. Pablo Marshall, 2015. "A simple heuristic for obtaining pareto/NBD parameter estimates," Marketing Letters, Springer, vol. 26(2), pages 165-173, June.
    7. Larry J. LeBlanc & Michael R. Galbreth, 2007. "Implementing Large-Scale Optimization Models in Excel Using VBA," Interfaces, INFORMS, vol. 37(4), pages 370-382, August.
    8. Edward I. Brody, 2001. "Marketing Engineering at BBDO," Interfaces, INFORMS, vol. 31(3_supplem), pages 74-81, June.
    9. Bas Donkers & Peter Verhoef & Martijn Jong, 2007. "Modeling CLV: A test of competing models in the insurance industry," Quantitative Marketing and Economics (QME), Springer, vol. 5(2), pages 163-190, June.
    10. Peter S. Fader & Bruce G. S. Hardie & Chun-Yao Huang, 2004. "A Dynamic Changepoint Model for New Product Sales Forecasting," Marketing Science, INFORMS, vol. 23(1), pages 50-65, October.
    11. Eduardo Gutiérrez González & Olga Vladimirovna Panteleeva, 2020. "A model for planning and optimizing an engineering company production," OPSEARCH, Springer;Operational Research Society of India, vol. 57(3), pages 669-699, September.
    12. Reutterer, Thomas & Platzer, Michael & Schröder, Nadine, 2021. "Leveraging purchase regularity for predicting customer behavior the easy way," International Journal of Research in Marketing, Elsevier, vol. 38(1), pages 194-215.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Park, Chang Hee & Park, Young-Hoon & Schweidel, David A., 2014. "A multi-category customer base analysis," International Journal of Research in Marketing, Elsevier, vol. 31(3), pages 266-279.
    2. Michael Platzer & Thomas Reutterer, 2016. "Ticking Away the Moments: Timing Regularity Helps to Better Predict Customer Activity," Marketing Science, INFORMS, vol. 35(5), pages 779-799, September.
    3. Peter S. Fader & Bruce G. S. Hardie & Jen Shang, 2010. "Customer-Base Analysis in a Discrete-Time Noncontractual Setting," Marketing Science, INFORMS, vol. 29(6), pages 1086-1108, 11-12.
    4. Fader, Peter S. & Hardie, Bruce G.S., 2009. "Probability Models for Customer-Base Analysis," Journal of Interactive Marketing, Elsevier, vol. 23(1), pages 61-69.
    5. Kinshuk Jerath & Peter S. Fader & Bruce G. S. Hardie, 2011. "New Perspectives on Customer "Death" Using a Generalization of the Pareto/NBD Model," Marketing Science, INFORMS, vol. 30(5), pages 866-880, September.
    6. Reutterer, Thomas & Platzer, Michael & Schröder, Nadine, 2021. "Leveraging purchase regularity for predicting customer behavior the easy way," International Journal of Research in Marketing, Elsevier, vol. 38(1), pages 194-215.
    7. Peter S. Fader & Bruce G. S. Hardie & Chun-Yao Huang, 2004. "A Dynamic Changepoint Model for New Product Sales Forecasting," Marketing Science, INFORMS, vol. 23(1), pages 50-65, October.
    8. Meade, Nigel & Islam, Towhidul, 2010. "Using copulas to model repeat purchase behaviour - An exploratory analysis via a case study," European Journal of Operational Research, Elsevier, vol. 200(3), pages 908-917, February.
    9. B. P. S. Murthi & Sumit Sarkar, 2003. "The Role of the Mangement Sciences in Research on Personalization," Review of Marketing Science Working Papers 2-2-1025, Berkeley Electronic Press.
    10. Peter J. Danaher & Michael S. Smith, 2011. "Modeling Multivariate Distributions Using Copulas: Applications in Marketing," Marketing Science, INFORMS, vol. 30(1), pages 4-21, 01-02.
    11. Giang Trinh & Cam Rungie & Malcolm Wright & Carl Driesener & John Dawes, 2014. "Predicting future purchases with the Poisson log-normal model," Marketing Letters, Springer, vol. 25(2), pages 219-234, June.
    12. Jerath, Kinshuk & Fader, Peter S. & Hardie, Bruce G.S., 2016. "Customer-base analysis using repeated cross-sectional summary (RCSS) data," European Journal of Operational Research, Elsevier, vol. 249(1), pages 340-350.
    13. Chao Wang & Ilaria Dalla Pozza, 2014. "The antecedents of customer lifetime duration and discounted expected transactions: Discrete-time based transaction data analysis," Working Papers 2014-203, Department of Research, Ipag Business School.
    14. Eymann, Torsten (Ed.), 2009. "Tagungsband zum Doctoral Consortium der WI 2009 [WI2009 Doctoral Consortium Proceedings]," Bayreuth Reports on Information Systems Management 40, University of Bayreuth, Chair of Information Systems Management.
    15. Anesbury, Zachary William & Talbot, Danielle & Day, Chanel Andrea & Bogomolov, Tim & Bogomolova, Svetlana, 2020. "The fallacy of the heavy buyer: Exploring purchasing frequencies of fresh fruit and vegetable categories," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    16. Bruce G. S. Hardie & Peter S. Fader & Robert Zeithammer, 2003. "Forecasting new product trial in a controlled test market environment," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 22(5), pages 391-410.
    17. Makoto Abe, 2009. "Customer Lifetime Value and RFM Data: Accounting Your Customers: One by One," CIRJE F-Series CIRJE-F-616, CIRJE, Faculty of Economics, University of Tokyo.
    18. Trinh, Giang & Wright, Malcolm J., 2022. "Predicting future consumer purchases in grocery retailing with the condensed Poisson lognormal model," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    19. Lu Yan & Yong Tan, 2014. "Feeling Blue? Go Online: An Empirical Study of Social Support Among Patients," Information Systems Research, INFORMS, vol. 25(4), pages 690-709, December.
    20. Roland T. Rust & Tuck Siong Chung, 2006. "Marketing Models of Service and Relationships," Marketing Science, INFORMS, vol. 25(6), pages 560-580, 11-12.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orinte:v:31:y:2001:i:3_supplement:p:s94-s107. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.