Stochastic Modeling of Buying Behaviour of Indian Customers

Abstract

A collaborative research on a problem of common interest and of immediate concern, which Hindustan Lever Limited (HLL)- a multinational company was facing or likely to face in the near future, was undertaken at the Indian Statistical Institute (ISI), Kolkata. The problem was to explain the purchase behaviour of frequently bought branded consumer products using stochastic models. For this, the panel data, after being coded to ensure anonymities were supplied to the ISI and on the basis of the available data, modeling of the buying behaviour was made. To begin with, some descriptive measures were calculated to understand the data and, finally, ‘Dirichlet’ multinomial model was used for explaining the buying behaviour of the customers in the specific segment with respect to the specific group of commodities. Because of not-so-wide coverage of the data and not-wellvalidated assumptions on the underlying distributions, the results failed to reveal much of the consumer behaviour pattern.