Forecasting Repeat Sales at CDNOW: A Case Study
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Penn collection
Marketing Papers
Degree type
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Subject
marketing-buyer behavior
forecasting-applications
Advertising and Promotion Management
Behavioral Economics
Business
Business Analytics
Marketing
Sales and Merchandising
Statistics and Probability
forecasting-applications
Advertising and Promotion Management
Behavioral Economics
Business
Business Analytics
Marketing
Sales and Merchandising
Statistics and Probability
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Fader, Peter S
Hardie, Bruce G. S
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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.
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2001-01-01