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Dirichlet model: its consistency and tracking pattern using buying behavior data

Authors:

Maradesa Adeleke ,

Federal University of Technology, Akure, NG
About Maradesa
Department of Statistics
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Akomolafe Abayomi Ayodele

Federal University of Technology, Akure, NG
About Akomolafe Abayomi
Department of Statistics
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Abstract

Dirichlet model is a standard choice for modeling customers’ satisfaction and their preference which make the modeling of their buying behavior possible. In tracking consumers’ behavior pattern with respect to 7up Bottling Company Nig. Plc flavor, Dirichlet model provides theoretical benchmark for price promotions, advertisement, branding as well as been used to decide future purchasing pattern of consumers when it comes to the volume of Pepsi, Mirinda and 7up that they will purchase. This research was carried out based on consistency of Dirichlet model in tracking and forecasting purchasing pattern of customers. This was established through the evidence from variance-covariance matrix, probability vector and parameter vector, stochastic matrix and the probability of sale at the next proposed eight periods for the three flavors. The precision parameter and Bayes factor were used to test the goodness of fit of Dirichlet model so that the estimate of Dirichlet model can be relied upon. The distribution has been fitted to real life datasets for illustrating its practical behavior; based on the evidences from probability of sale at different proposed sales periods, Dirichlet model predicted that the probability of purchase is not stable for one product, but keeps varying from period to period. Only the Mirinda flavor has more stable sales throughout the proposed period with average0.569478 (56.9478%), while Pepsi and 7up have low purchasing probability with average 0.368518 (36.85%) and 0.361292(36.13%), respectively. Therefore, it can be relied on the Dirichlet model for predicting customers buying behavior pattern thereby enhancing efficient and consistent planning and decision making.
How to Cite: Adeleke, M. & Ayodele, A.A., (2017). Dirichlet model: its consistency and tracking pattern using buying behavior data. Sri Lankan Journal of Applied Statistics. 18(2), pp.89–103. DOI: http://doi.org/10.4038/sljastats.v18i2.7956
Published on 26 Dec 2017.
Peer Reviewed

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