Using the Dirichlet model to predict how fashion brands compete and grow on eBay

Abstract

E-fashion brand competition has historically been studied from an attitudinal lens, through surveys and theory-based approaches. These studies generally examine consumer attitudes, satisfaction and loyalty; highlighting that trust, satisfaction and reputation are key e-commerce success elements. However, the empirical consumer behaviour literature rebuts the use of attitudes to explain brand performance, criticising their subjectivity and the overall ineffectiveness of loyalty as a brand growth tool. The article presents Gerald Goodhardt and colleagues' Dirichlet model as an alternative approach to understanding e-fashion buyer behaviour. The Dirichlet model is a robust, stochastic model that has reliably predicted well-established lawlike patterns of buyer behaviour and brand competition. We apply Dirichlet modelling to a new, non-fast moving consumer goods category to extend consumer behaviour research in the online environment. The study uses consumer panel data from the United Kingdom, across two consecutive years. We conclude that the Dirichlet model has an excellent fit within the eBay fashion brand market. The study also identifies that the well-known double jeopardy pattern exists within this market, demonstrating that e-fashion brands grow through acquisition rather than retention of customers. This provides a different viewpoint than most e-fashion brand growth literature. In addition to this, we examine the predictive capability of the Dirichlet model. We use a holdout sample to show that the model can predict future brand performance metrics, which is an exciting new development in consumer behaviour research.

How do e-stores grow their market share?

“…Our data shows that penetration predicts market share in all circumstances compared to the average purchase frequency or average spend per purchase. This is consistent with Ehrenberg et al (1990), Sharp (2010), Jung et al (2016), Martin et al (2020), or Chowdhury et al (2022) to name just a few.…”

“…Later, a similar pattern was found in the purchase behaviour of consumer goods with appropriate adjustment, where familiarity has been replaced by purchase in a given period and likability by brand loyalty (Ehrenberg, 1972;Martin, 1973). Since then it has been proven to generalize across a wide range of consumption situations (packaged goods, durables, fashion, services, television viewing, websites, political polls, sports and physical activities), markets (B2B and B2C) and countries (Ehrenberg et al, 1990;Danaher et al, 2003;Yang et al, 2005;Doyle et al, 2013;Habel and Lockshin, 2013;Romaniuk and Sharp, 2015;Gruneklee et al, 2016;Jung et al, 2016;Kooyman and Wright, 2017;Taneja, 2020;Chowdhury et al, 2022). Trinh et al (2019) even found the pattern in the wine selection by its country of origin.…”

Death by 1000 ‘true fans’: Do marketing laws apply to music listening?

“…Our classifications allow the grouping of the many self‐classified genres into meta genres (e.g., pirate metal, Viking metal, and at least a dozen more into Metal) and shape the questionnaire for our data collection. Within the DoP literature, using predefined categories, for example, ‘bread and bagels’ from Nielsen Kilts Centre for Marketing (Grasby et al, 2022) or ‘fashion clothing’ from Kantar World Panel UK (Chowdhury et al, 2021), is the norm.…”

“…While many sub‐genres appear to be self‐evident, containing terms that make it clear that Pirate Metal and Viking Metal are both parts of the Metal genre, this is not always the case. Defining a market is not inconsequential or uncontroversial but frequently occurs for items people buy (Chowdhury et al, 2021; Grasby et al, 2022) and music people listen to (Rentfrow & Gosling, 2003, 2006). However, as a genre becomes increasingly obscure, it is also listened to by a smaller proportion of the sample, so its precise location in a classification framework becomes less of an issue.…”

“…Prior studies typically measure different genres and use different classifications. For example, Savage (2006) Centre for Marketing (Grasby et al, 2022) or 'fashion clothing' from Kantar World Panel UK (Chowdhury et al, 2021), is the norm.…”