Seminar – Non-parametric estimation of habitual brand loyalty

Jean-Pierre Dube, James M Kilts Distinguished Service Professor, Chicago Booth

Testing for and measuring habitual brand loyalty (HBL) is one of the classic questions in quantitative marketing. We propose a non-parametric test for HBL using a “dynamic potential outcomes” model that resolves the classic identification challenge of decoupling state dependence and unobserved heterogeneity. We then propose a semi-parametric test for forward-looking behaviour to assess whether consumers rationally plan their HBL. Case studies of several large consumer packaged goods categories reveal a non-trivial extent of HBL in consumers’ brand choices. Semi-parametric evidence for forward-looking consumer behaviour strongly rejects the myopic discrete-choice model in favour of the dynamic discrete-choice model with a freely-varying discount factor. However, consumers are found to be considerably more impatient than would be implied by the real rate of interest. Nevertheless, the long-run price elasticities from a dynamic discrete-choice model are found to be larger in magnitude than those from a model with myopic choices.

Speaker bio

Jean-Pierre Dubé is the James M. Kilts Distinguished Service Professor of Marketing at the University of Chicago Booth School of Business. Professor Dubé is also director of the Kilts Center for Marketing at the Booth School, a Research Associate at the National Bureau of Economic Research and a faculty fellow at the Marketing Science Institute. From 2008-2010, he was a research consultant for the Yahoo! Microeconomics Research group. He has been working as a research consultant with Amazon since 2018.

His research interests lie at the intersection of industrial organisation and quantitative marketing. He has conducted empirical studies on the formation of consumer preferences for branded goods, price discrimination, advertising, food deserts and nutrition policy, and the role of misinformation in consumer demand. This empirical focus is also reflected in his MBA course on pricing strategies, which is designed to teach students how to apply marketing models and analytics to develop pricing strategies in practice. Several of his recent research projects are in collaboration with companies in the US and in China.

Dubé’s work has been published in The American Economic Review, Econometrica, The Journal of Marketing Research, The Journal of Political Economy, Management Science, Marketing Science, Quantitative Marketing and Economics, the Quarterly Journal of Economics and The Rand Journal of Economics. He is an area/associate editor for The Journal of Marketing Research, Management Science, Marketing Science, and Quantitative Marketing and Economics. He was the recipient of the Chicago Booth class of 2016 Phoenix Award for service to the extracurricular and community activities of the graduating class, the 2008 Paul E. Green Award for Best paper in the Journal of Marketing Research and of the 2005 Faculty Teaching Excellence Award for Evening MBA and Weekend MBA Programs at the Chicago Booth. He was also the recipient of several MSI Research Grants, a Kauffman grant, and a Yahoo! Faculty Research Grant.

Dubé earned a bachelor’s degree from the University of Toronto in quantitative methods in economics in 1995, a master’s degree in economics in 1996, and a PhD in 2000 from Northwestern University. He joined the Chicago Booth faculty in 2000.

For more information, please get in touch with Luke Slater.