Modeling the Stock and Threshold Effect of Personal Selling

Inoue Tomohiko, Sato Tadahiko

doi:10.5023/jappstat.47.17

<p>This study proposes a market response model on pharmaceutical personal selling (detailing) with promotion stocks and threshold effects. Detailing is a major instrument which requires large investment in pharmaceutical marketing, thus, its effectiveness and resource optimization are of much interest to management. Moreover, face-to-face communication between customers (i.e., physicians) and sales reps has become increasingly important in terms of customer relationship management. In this study, we define two promotion stock variables with carryover structure to represent different types of detailing effects on market response; product promotion and customer relationship building. Each stock variable has a threshold parameter which defines four regimes of responsiveness using the threshold regression model. We employed the hierarchical Bayes model to evaluate the heterogeneity of physicians' parameters including response coefficients, carryover rates and threshold parameters. We estimated the proposed model by MCMC, and from the results such as individual parameters by regime, we determined marketing implications. We also discuss the possibility of sales resource optimization based on the cluster analysis using the estimated proportion of each regime by physician.</p>

Modeling the Stock and Threshold Effect of Personal Selling

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