A Note on the Use of Markov Chains in Forecasting Store Choice

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Ehrenberg's sweeping criticism of Markov brand switching models [3] highlights many shortcomings of these models for aggregate analysis of consumer behavior. While it has been pointed out that some of his criticisms are not entirely correct [13], one of Ehrenberg's themes is unquestionably valid. The models tend to break down empirically due to violations of important Markovian stability assumptions [14]. A situation in which the assumptions of the model appear less restrictive is short-run forecasting of store choice behavior of individual families.

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1969-12-01
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Postprint version. Published in Management Science, Volume 16, Issue 4, December 1969, B-281 to B-285. Publisher URL: http://mansci.journal.informs.org/
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