William F. Massy

Principal Components Regression in Exploratory Statistical Research

Abstract Regression upon principal components of the percentage points of the income and education distributions for 1950 census tracts in the city of Chicago led to the estimation of “beta coefficient profiles” for television receiver and refrigerator ownership, for central heating system usage, and for a measure of dwelling unit overcrowding. The betas are standardized coefficients of regression of a dependent variable upon the proportions of families in the classes of the marginal income and education distributions. They measure the relative contribution of families in these classes to the over-all per cent saturation of the dependent variable in the tract. The coefficients were estimated by techniques developed in the first portion of the paper; estimation by classical regression methods would have been impossible because of multicollinearity. The empirical results are in substantial agreement with findings from regressions of the dependent variables upon the mean values of income and education, and t...

Short-Term Price and Dealing Effects in Selected Market Segments

Changes in relative price and dealing activity are likely to affect different segments of the market in different ways. A distributed lag model is developed for predicting a firm’s market share over a period of weeks from knowledge of the changes in these variables. It is tested on aggregate data for a metropolitan market, and applied to data for three classes of underlying segments. The bases for segmenting the market are by family purchasing characteristic, package size, and channel of distribution.

A Theory of Market Segmentation

In this article a normative theory of market segmentation is developed that takes account of major implementation problems. The theory is presented as a multistage mathematical model of the full range of segmentation possibilities from the perfectly discriminating monopolist to the mass marketer. The theorys major implications for the philosophy and application of the market segmentation strategy are discussed in detail.

Improving Measurement of Productivity in Higher Education

15 Chicago. Christopher Mackie (cmackie@nas.edu) is a study director with the National Academies’ Committee on National Statistics specializing in economic measurement and statistics. He has participated in expert panels on assessing the value of measures of self-reported well-being, measuring civic engagement and social cohesion, developing cost-ofliving and price indices, designing nonmarket accounts for the US, and accounting for health and health care. He is the author of Canonizing Economic Theory: How Theories and Ideas Are Selected in Economics. He has taught at the University of North Carolina, North Carolina State University, and Tulane University.

Forecasting the Demand for New Convenience Products

The author’s stochastic evolutionary adoption model (STEAM) is described. Methods for estimating its parameters from panel data covering the first part of the introductory period are outlined. A method by which the future purchase history of each panel household can be simulated and the results projected into a total market forecast is reported. Results obtained by applying the model and simulation procedure to live data for a new product are shown, and compared with the product’s actual sales during the years after its introduction.

Market Segmentation and the Effectiveness of a Brand's Price and Dealing Policies

HE marketing program of many firms is predicated on the assumption that their customers are heterogeneous with respect to purchasing habits. This assumption is often supported by data reporting that certain segments of customers buy more of a product than others. These customer segments are usually classified in terms of socioeconomic status, life cycle, location, and/or personality characteristics. The authors show that this simple view of market segmentation is not sufficient to provide an effective guide for management decisions. They advance a more precise conceptual framework for the evaluation of market segmentation as a strategy, based on estimates of the demand elasticities of individual market segments. In addition, they present the results of a research project aimed at estimating elasticities with respect to price and dealing activities for selected market segments for a frequently purchased food product. Their work represents an attempt to make the concept of market segmentation more operational and managerially meaningful. INTRODUCTION

The Effect of Nonhomogeneous Populations on Markov Steady-State Probabilities

Abstract An important aspect of many Markovian analyses is the steady-state solution. This can give insight into the dynamics or momentum existing in a system. However, when we obtain Markov transition matrices by aggregating across non-homogeneous (with respect to transition probabilities) individuals, this matrix may not bear any resemblance to the transition matrices possessed by the individuals. This article investigates the effect of this heterogeneity on the calculated steady-state solution obtained from the aggregate transition matrix. We find that under various conditions this calculated steady-state solution is quite close to the true steady-state solution. These results have important implications for Markovian forecasting methods.