Determining Interbrand Substitutability through Survey Measurement of Consumer Preference Structures

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Abstract
The authors develop a survey approach to determine cross-price elasticities and switching matrices for brands in a prespecified product class. The survey determines for each household whether to elicit multiple subhousehold preference structures to account for differing user/usage situations within the household. The preference structures (brand preferences and price-preference tradeoffs) obtained are used to specify preference functions and estimate choice probabilities. The choice probabilities depend on brand prices and form the basis for obtaining market-level cross-price elasticities and switching matrices by aggregation. The survey-based results are found to be predictive of the actual purchase behavior of 2000 IRI scanner panel households residing in the same area as, but not included in, the survey sample.