IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v32y2013i3p454-470.html
   My bibliography  Save this article

A Direct Utility Model for Asymmetric Complements

Author

Listed:
  • Sanghak Lee

    (Tippie College of Business, University of Iowa, Iowa City, Iowa 52242)

  • Jaehwan Kim

    (Korea University Business School, Korea University, Seoul 136-701, Korea)

  • Greg M. Allenby

    (Fisher College of Business, Ohio State University, Columbus, Ohio 43210)

Abstract

A symmetric complements refer to goods where one good is more dependent on the other, yet consumers receive enhanced utility from consuming both. Examples include garden hoses and sprinklers, chips and dip, and routine versus personalized services where the former has a broader base for utility generation and the latter is more dependent on the other's presence. Measuring asymmetric effects is difficult when all that is observed are the purchase quantities present in a consumer's market basket. We propose a direct utility model with a latent decision sequence for measuring asymmetric effects that allows us to capture differential responses to cross-category purchases and inventories. Scanner panel data of milk and cereal purchases are used to investigate the presence of asymmetric complementarity, and implications are explored through counterfactual analyses involving cross-price elasticities and spillover effects of merchandising variables.

Suggested Citation

  • Sanghak Lee & Jaehwan Kim & Greg M. Allenby, 2013. "A Direct Utility Model for Asymmetric Complements," Marketing Science, INFORMS, vol. 32(3), pages 454-470, May.
    • Handle: RePEc:inm:ormksc:v:32:y:2013:i:3:p:454-470
    DOI: 10.1287/mksc.2013.0782
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.2013.0782
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mksc.2013.0782?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. Nobuhiko Terui & Masataka Ban & Greg M. Allenby, 2011. "The Effect of Media Advertising on Brand Consideration and Choice," Marketing Science, INFORMS, vol. 30(1), pages 74-91, 01-02.
    2. Harikesh Nair & Pradeep Chintagunta & Jean-Pierre Dubé, 2004. "Empirical Analysis of Indirect Network Effects in the Market for Personal Digital Assistants," Quantitative Marketing and Economics (QME), Springer, vol. 2(1), pages 23-58, March.
    3. Puneet Manchanda & Asim Ansari & Sunil Gupta, 1999. "The “Shopping Basket”: A Model for Multicategory Purchase Incidence Decisions," Marketing Science, INFORMS, vol. 18(2), pages 95-114.
    4. Andrew Ainslie & Peter E. Rossi, 1998. "Similarities in Choice Behavior Across Product Categories," Marketing Science, INFORMS, vol. 17(2), pages 91-106.
    5. Sri Devi Duvvuri & Asim Ansari & Sunil Gupta, 2007. "Consumers' Price Sensitivities Across Complementary Categories," Management Science, INFORMS, vol. 53(12), pages 1933-1945, December.
    6. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    7. Nitin Mehta, 2007. "Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis," Marketing Science, INFORMS, vol. 26(2), pages 196-217, 03-04.
    8. Karsten Hansen & Vishal Singh & Pradeep Chintagunta, 2006. "Understanding Store-Brand Purchase Behavior Across Categories," Marketing Science, INFORMS, vol. 25(1), pages 75-90, 01-02.
    9. Amiya Basu & Tridib Mazumdar & S. P. Raj, 2003. "Indirect Network Externality Effects on Product Attributes," Marketing Science, INFORMS, vol. 22(2), pages 209-221, April.
    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. Kim, Chul & Smith, Adam N. & Kim, Jaehwan & Allenby, Greg M., 2023. "Outside good utility and substitution patterns in direct utility models," Journal of choice modelling, Elsevier, vol. 49(C).
    2. Gelper, Sarah & Wilms, Ines & Croux, Christophe, 2016. "Identifying Demand Effects in a Large Network of Product Categories," Journal of Retailing, Elsevier, vol. 92(1), pages 25-39.
    3. Jang, Sungha & Prasad, Ashutosh & Ratchford, Brian T., 2017. "Consumer Search of Multiple Information Sources and its Impact on Consumer Price Satisfaction," Journal of Interactive Marketing, Elsevier, vol. 40(C), pages 24-40.
    4. Jean-Pierre H. Dubé, 2018. "Microeconometric Models of Consumer Demand," NBER Working Papers 25215, National Bureau of Economic Research, Inc.
    5. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2017. "Endogenous Product Boundary," Manchester School, University of Manchester, vol. 85(1), pages 13-40, January.
    6. Ma, Shaohui & Fildes, Robert & Huang, Tao, 2016. "Demand forecasting with high dimensional data: The case of SKU retail sales forecasting with intra- and inter-category promotional information," European Journal of Operational Research, Elsevier, vol. 249(1), pages 245-257.
    7. Michael Lewis & Yanwen Wang & Chunhua Wu, 2019. "Season Ticket Buyer Value and Secondary Market Options," Marketing Science, INFORMS, vol. 38(6), pages 973-993, November.
    8. Kim, Youngju & Hardt, Nino & Kim, Jaehwan & Allenby, Greg M., 2022. "Conjunctive screening in models of multiple discreteness," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 1209-1234.
    9. John R. Howell & Sanghak Lee & Greg M. Allenby, 2016. "Price Promotions in Choice Models," Marketing Science, INFORMS, vol. 35(2), pages 319-334, March.
    10. Lee, Sanghak & Kim, Hyowon & Kim, Jaehwan & Allenby, Greg M., 2018. "A choice model for mixed decision variables," Journal of choice modelling, Elsevier, vol. 28(C), pages 82-96.
    11. Wang, Ao, 2021. "A BLP Demand Model of Product-Level Market Shares with Complementarity," The Warwick Economics Research Paper Series (TWERPS) 1351, University of Warwick, Department of Economics.
    12. Anna E. Tuchman & Harikesh S. Nair & Pedro M. Gardete, 2018. "Television ad-skipping, consumption complementarities and the consumer demand for advertising," Quantitative Marketing and Economics (QME), Springer, vol. 16(2), pages 111-174, June.
    13. Iaria, Alessandro & ,, 2020. "Identification and Estimation of Demand for Bundles," CEPR Discussion Papers 14363, C.E.P.R. Discussion Papers.
    14. Sanghak Lee & Sunghoon Kim & Sungho Park, 2022. "A sequential choice model for multiple discrete demand," Quantitative Marketing and Economics (QME), Springer, vol. 20(2), pages 141-178, June.
    15. Han, Yoonju & Chandukala, Sandeep R. & Li, Shibo, 2022. "Impact of different types of in-store displays on consumer purchase behavior," Journal of Retailing, Elsevier, vol. 98(3), pages 432-452.
    16. Kim, Chul & Jun, Duk Bin & Park, Sungho, 2018. "Capturing flexible correlations in multiple-discrete choice outcomes using copulas," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 34-59.
    17. Dong Soo Kim & Roger A. Bailey & Nino Hardt & Greg M. Allenby, 2017. "Benefit-Based Conjoint Analysis," Marketing Science, INFORMS, vol. 36(1), pages 54-69, January.
    18. Sanghak Lee & Greg M. Allenby, 2014. "Modeling Indivisible Demand," Marketing Science, INFORMS, vol. 33(3), pages 364-381, May.
    19. Ludovic Stourm & Raghuram Iyengar & Eric T. Bradlow, 2020. "A Flexible Demand Model for Complements Using Household Production Theory," Marketing Science, INFORMS, vol. 39(4), pages 763-787, July.

    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. Kim, Chul & Jun, Duk Bin & Park, Sungho, 2018. "Capturing flexible correlations in multiple-discrete choice outcomes using copulas," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 34-59.
    2. Ma, Yu & Seetharaman, P.B. & Narasimhan, Chakravarthi, 2012. "Modeling Dependencies in Brand Choice Outcomes Across Complementary Categories," Journal of Retailing, Elsevier, vol. 88(1), pages 47-62.
    3. Timothy J. Richards, 2017. "Analysis of Umbrella Branding with Crowdsourced Data," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 135-150, April.
    4. Harald Hruschka, 2017. "Analyzing the dependences of multi-category purchases on interactions of marketing variables," Journal of Business Economics, Springer, vol. 87(3), pages 295-313, April.
    5. Maxim Sinitsyn, 2012. "Coordination of Price Promotions in Complementary Categories," Management Science, INFORMS, vol. 58(11), pages 2076-2094, November.
    6. Jean-Pierre H. Dubé, 2018. "Microeconometric Models of Consumer Demand," NBER Working Papers 25215, National Bureau of Economic Research, Inc.
    7. Richards, Timothy J. & Hamilton, Stephen F. & Yonezawa, Koichi, 2018. "Retail Market Power in a Shopping Basket Model of Supermarket Competition," Journal of Retailing, Elsevier, vol. 94(3), pages 328-342.
    8. Xiaojing Dong & Pradeep Chintagunta & Puneet Manchanda, 2011. "A new multivariate count data model to study multi-category physician prescription behavior," Quantitative Marketing and Economics (QME), Springer, vol. 9(3), pages 301-337, September.
    9. Rakesh Niraj & V. Padmanabhan & P. B. Seetharaman, 2008. "Research Note—A Cross-Category Model of Households' Incidence and Quantity Decisions," Marketing Science, INFORMS, vol. 27(2), pages 225-235, 03-04.
    10. Nitin Mehta, 2007. "Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis," Marketing Science, INFORMS, vol. 26(2), pages 196-217, 03-04.
    11. Prasad, Ashutosh & Strijnev, Andrei & Zhang, Qin, 2008. "What can grocery basket data tell us about health consciousness?," International Journal of Research in Marketing, Elsevier, vol. 25(4), pages 301-309.
    12. Kamakura, Wagner A. & Kwak, Kyuseop, 2020. "Menu-choice modeling with interactions and heterogeneous correlated preferences," Journal of choice modelling, Elsevier, vol. 37(C).
    13. Leeflang, Peter S.H. & Parreño Selva, Josefa & Van Dijk, Albert & Wittink, Dick R., 2008. "Decomposing the sales promotion bump accounting for cross-category effects," International Journal of Research in Marketing, Elsevier, vol. 25(3), pages 201-214.
    14. Feihong Xia & Rabikar Chatterjee & Jerrold H. May, 2019. "Using Conditional Restricted Boltzmann Machines to Model Complex Consumer Shopping Patterns," Marketing Science, INFORMS, vol. 38(4), pages 711-727, July.
    15. Raluca M. Ursu & Daria Dzyabura, 2020. "Retailers’ product location problem with consumer search," Quantitative Marketing and Economics (QME), Springer, vol. 18(2), pages 125-154, June.
    16. repec:hum:wpaper:sfb649dp2005-028 is not listed on IDEAS
    17. Karthik Sridhar & Ram Bezawada & Minakshi Trivedi, 2012. "Investigating the Drivers of Consumer Cross-Category Learning for New Products Using Multiple Data Sets," Marketing Science, INFORMS, vol. 31(4), pages 668-688, July.
    18. Boztuğ, Yasemin & Hildebrandt, Lutz, 2005. "A market basket analysis conducted with a multivariate logit model," SFB 649 Discussion Papers 2005-028, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    19. Vithala R. Rao & Gary J. Russell & Hemant Bhargava & Alan Cooke & Tim Derdenger & Hwang Kim & Nanda Kumar & Irwin Levin & Yu Ma & Nitin Mehta & John Pracejus & R. Venkatesh, 2018. "Emerging Trends in Product Bundling: Investigating Consumer Choice and Firm Behavior," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 107-120, March.
    20. Adam N. Smith & Stephan Seiler & Ishant Aggarwal, 2023. "Optimal Price Targeting," Marketing Science, INFORMS, vol. 42(3), pages 476-499, May.
    21. Kopalle, Praveen & Biswas, Dipayan & Chintagunta, Pradeep K. & Fan, Jia & Pauwels, Koen & Ratchford, Brian T. & Sills, James A., 2009. "Retailer Pricing and Competitive Effects," Journal of Retailing, Elsevier, vol. 85(1), pages 56-70.

    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:ormksc:v:32:y:2013:i:3:p:454-470. 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.