The Bargain Value Model and a Comparison of Managerial Implications with the Linear Learning Model

A new stochastic brand choice model, the Bargain Value Model, is introduced. Using consumer panel data, the model predicts an individual household's probability of purchasing various brands as a function of the prevailing price of those brands. Based on consumer behavior constructs, the model differs sharply from the Linear Learning Model in its behavioral interpretation. This difference leads the models to have divergent managerial policy implications. After describing the Bargain Value Model, the differences between the models are explored along with some empirical results.