The S Parameter in the Dirichlet-NBD Model: a Simple Interpretation

John A. Bound

Citation

Bound, J (2009) "The S Parameter in the Dirichlet-NBD Model: a Simple Interpretation", Journal of Empirical Generalisations in Marketing Science, Vol 12, No.3

Abstract

In fitting the NBD Dirichlet model to consumer purchase data the S parameter requires complicated calculation and has no obvious meaning unlike the other three required parameters.

Examination of consumer panel data for many product categories shows the S parameter to be highly correlated with the average number of brands bought. It may therefore be interpreted as a measure of diversity of brand purchasing behaviour in the category.

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