Market share modelling and forecasting using Markov chains and alternative models

Article

Chan, Ka Ching. 2015. "Market share modelling and forecasting using Markov chains and alternative models." International Journal of Innovative Computing Information and Control. 11 (4), pp. 1205-1218.
Article Title

Market share modelling and forecasting using Markov chains and alternative models

ERA Journal ID3492
Article CategoryArticle
Authors
AuthorChan, Ka Ching
Journal TitleInternational Journal of Innovative Computing Information and Control
Journal Citation11 (4), pp. 1205-1218
Number of Pages14
Year2015
Place of PublicationJapan
ISSN1349-4198
Web Address (URL)http://www.ijicic.org/ijicic-14-09005.pdf
Abstract

Markov chain has been a popular approach for market share modelling and forecasting in many industries. This paper presents four mathematical models for the same market share problem based on different underlying assumptions. The four models include a homogeneous Markov model, a time-varying Markov model, a new extended time-varying Markov model, and a novel non-Markov model. A numerical example in the telecommunications industry is included to illustrate that all four models can be used, for market share forecasting. Although Markov models are popular, forecasters should be cautious in choosing Markov or the alternative models for their problems in hand. In order to achieve the best forecasting results, forecasters should, have in-depth understanding of the industries, market conditions, and trends, then make appropriate assumptions, and apply or even develop the most suitable models.

KeywordsMarkov chain, market share, forecasting, brand switching, competition
ANZSRC Field of Research 2020460207. Modelling and simulation
359999. Other commerce, management, tourism and services not elsewhere classified
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Byline AffiliationsLa Trobe University
Institution of OriginUniversity of Southern Queensland
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