Brand Preferences and Simple Markov Processes

Abstract

Brand preference information combined with a simple two-dimensional Markov process can be used to study characteristics of market dynamics. Advertising activity can be used to alter temporarily the brand preference structure of the consuming public. Such changes generate interesting transient conditions that can be studied mathematically. Discussions of time relations, period-to-period changes in market shares, gains and losses resulting from promotional activity and rapidity of convergence to new steady-state values are all considered. In a concluding section, sensitivity characteristics of the relations are commented upon.