Specifying models according to level of demand

Abstract

In Section 4.2, we proposed three classes of demand functions: product category/ product class sales, brand sales, and brand market share models.l Such a classification is useful because model specification — both in terms of variables and mathematical form — can have features that are distinct for each of these three categories. In addition, we can distinguish models of individual- and aggregate demand, which we discuss in Section 9.1. Individual demand refers to the individual- or household level. Aggregate demand can be measured at levels such as store-, chain- and market demand. Further distinctions can be made between segments, regions, etc. In this chapter we concentrate on aggregate demand models for the three classes of demand functions, mentioned above. In Section 9.2, we discuss product class sales models.