Dynamic Brand Satiation

Abstract

The authors develop a dynamic factor model of brand satiation to explain longitudinal variation in consumer purchases. Factor loadings are associated with a brand's position along a satiation dimension, and factor scores are associated with a household's sensitivity to satiation effects. The authors introduce dynamics by allowing the factor scores to evolve over time, reflecting variation in household satiation sensitivity. They embed the factor model in a direct utility model that allows for both corner and interior solutions and show that it fits the data better than alternative specifications. Analysis of a panel data set of corn chips purchases indicates that respondent satiation is better explained by a low-dimensional factor structure, while baseline utility and preferences are not. The authors explore implications for product line assortment in the face of quickening satiation. Dynamic Brand SatiationConsumer tastes and preferences change over time for a variety of reasons; for example, preferences change with price, during promotional events, and after new product introductions. They also change with consumer learning when consumers grow tired of offerings, because of variety seeking and state-dependent behavior and because of changing sensitivities to product characteristics due to changing consumption contexts. A critical aspect in studying the dynamics of preference is determining whether changes are related to specific product attributes or combinations of attributes and which attributes lead to greater satiation in demand for offerings. If dynamic brand preferences are tied to product attributes, firms can consider physically reformulating brands to make them more attractive to consumers.Challenges arise in quantifying the dynamics of brand satiation because of the large number of brands and varieties in a category and an even larger number of attributes used to formulate the brands. Most brands comprise many * Shohei Hasegawa is a doctoral candidate (

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