20.1 Definitions
Structural in quantitative marketing: An estimation strategy where we assume and impose a structure to the consumer’s maximization problem and these parameters are of the consumers’ utility functions (Tülin Erdem and Keane 1996).
- These parameter are policy-invariant.
Reduced form brand choice model: functions of marketing strategy variables (e..g, marketing mix). Hence, reduced-form models’ parameters are variant to policy. So it’s hard to study outcome of policy implementation may be reliable.
Uncertainty about product characteristics + learning behavior affect brand choice.
Two models (good in cases where consumer learning is vital to the choice process):
Dynamic structural model with immediate utility maximization
Forward-looking dynamic structural model (i.e., consumers don’t choose products based on their current utility, but also future utility).