Logit analysis in marketing
Encyclopedia
Logit analysis is a statistical technique used by marketers
to assess the scope of customer acceptance of a product
, particularly a new product. It attempts to determine the intensity or magnitude of customers' purchase intentions and translates that into a measure of actual buying behaviour. Logit analysis assumes that an unmet need in the marketplace has already been detected, and that the product has been designed
to meet that need. The purpose of logit analysis is to quantify the potential sales of that product. It takes survey data on consumers purchase intentions and converts it into actual purchase probabilities.
Logit analysis defines the functional relationship between stated purchase intentions and preferences, and the actual probability of purchase. A preference regression
is performed on the survey data. This is then modified with actual historical observations of purchase behavior. The resultant functional relationship defines purchase probability.
This is the most useful of the purchase intention/rating translations because explicit measures of confidence level and statistical significance can be calculated. Other purchase intention/rating translations include the preference-rank translation
and the intent scale translation
.
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
to assess the scope of customer acceptance of a product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
, particularly a new product. It attempts to determine the intensity or magnitude of customers' purchase intentions and translates that into a measure of actual buying behaviour. Logit analysis assumes that an unmet need in the marketplace has already been detected, and that the product has been designed
New product development
In business and engineering, new product development is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible or intangible...
to meet that need. The purpose of logit analysis is to quantify the potential sales of that product. It takes survey data on consumers purchase intentions and converts it into actual purchase probabilities.
Logit analysis defines the functional relationship between stated purchase intentions and preferences, and the actual probability of purchase. A preference regression
Preference regression (in marketing)
Preference regression is a statistical technique used by marketers to determine consumers’ preferred core benefits. It usually supplements product positioning techniques like multi dimensional scaling or factor analysis and is used to create ideal vectors on perceptual maps.-Application:Starting...
is performed on the survey data. This is then modified with actual historical observations of purchase behavior. The resultant functional relationship defines purchase probability.
This is the most useful of the purchase intention/rating translations because explicit measures of confidence level and statistical significance can be calculated. Other purchase intention/rating translations include the preference-rank translation
Preference-rank translation
Preference-rank translation is a mathematical technique used by marketers to convert stated preferences into purchase probabilities, that is, into an estimate of actual buying behaviour...
and the intent scale translation
Intent scale translation
Intent scale translation is a mathematical technique used by marketers to convert stated purchase intentions into purchase probabilities, that is, into an estimate of actual buying behaviour...
.
See also
- marketing researchMarketing researchMarketing research is "the function that links the consumer, customer, and public to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve...
- New product developmentNew product developmentIn business and engineering, new product development is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible or intangible...
- marketingMarketingMarketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
- preference regressionPreference regression (in marketing)Preference regression is a statistical technique used by marketers to determine consumers’ preferred core benefits. It usually supplements product positioning techniques like multi dimensional scaling or factor analysis and is used to create ideal vectors on perceptual maps.-Application:Starting...
- logitLogitThe logit function is the inverse of the sigmoidal "logistic" function used in mathematics, especially in statistics.Log-odds and logit are synonyms.-Definition:The logit of a number p between 0 and 1 is given by the formula:...
- Comparison of statistical packagesComparison of statistical packagesThe following tables compare general and technical information for a number of statistical analysis packages.-General information:Basic information about each product...