a structural analysis of sales patterns of music cdsmyamada/m. yamada mktsc 2002 u of albert… ·...

(C) Yamada & Kato 1

A Structural Analysis ofSales Patterns of Music CDs

Marketing Science Conference 2002, University of Alberta, Edmonton Canada,June 28, 4:00-5:30 p.m., Diffusion Models [4], Friday D4 Room:1-10

Masataka YamadaKyoto Sangyo University

[email protected]

Hiroshi KatoIihara Management Institute

[email protected]

(C) Yamada & Kato 2

• 1. Introduction: motivation and objectives ofthis study

• 2. Questionnaires– 2.1. Skip the first half questions– 2.2. Questions by Individual Artist/Group

• 3. Sales Forecast by a Structurally SynthesizedModel

• 4. Artist/Group Decomposed Lifecycle• 5. Summary, Limitations and Future Studies

Order of Presentation

(C) Yamada & Kato 3

1. Introduction: motivation and objectivesof this study

• Since year 2000, We have been studying thesales patterns of music CDs to forecast thesales.

• Some of the results we have obtained are:– The sales patterns are showing rapidly declining

patterns.– It is found that the Weibull model fits better than

the exponential model on the sharp decliningsales data. http://www.kyoto-su.ac.jp/~myamada/UCLA/sld001.htm

(C) Yamada & Kato 4

– An eagerly wanted good is proposed for a goodwhich indicates the sharp declining sales patternas a new product category based on the state ofconsumer’s needs.

– A high involvement model for an eagerly wantedproduct is proposed as a third adoption model inaddition to the high cognitive processing“hierarchy of effects” model and the lowcognitive processing “low involvement” model(Gatignon and Robertson 1985).http://roms.utdallas.edu/PDFfiles/manu26.pdf

1. Introduction: motivation and objectivesof this study (continued)

(C) Yamada & Kato 5

• All the results so far are drawn from the sales dataand conceptual elaborations from past literatureincluding our works.

• Therefore, we would like to investigate theconsumers side this time through the internetquestionnaire survey.

• Assuming that there exist three segments amongmusic CD purchasers in convenient stores:(1)committed fans, (2) ordinary fans and (3) non-fans,their purchase timings, reasons and type of CDpurchased (single or album) are asked.

1. Introduction: motivation and objectivesof this study (continued)

(C) Yamada & Kato 6

2. Questionnaires

Some Details about the Questionnaire Survey

Dates surveyed 9/26/02 - 10/10/02Subjects Person who bought one or more music CDs for a year

Number of people received a request mail 14,414Number of respondents 4,112

Rate of response 28.50%Male/Female response rates Male 37.9% Female 62.1%

19 years old or less: 14.9%20 - 24 years old: 17.3%25 - 29 years old: 23.2%30 - 34 years old: 20.4%35 - 39 years old: 13.0%

40 years old or more: 11.2%Married/Unmarried response rates Married 1480 (40.8%)/Unmarried 2144 (59.2%)Married 1480 (40.8%)/Unmarried 2144 (59.2%)Married 1480 (40.8%)/Unmarried 2144 (59.2%)Married 1480 (40.8%)/Unmarried 2144 (59.2%)

Age distribution of respondents

(C) Yamada & Kato 7

2.1. Skip the first half questionsCommon questions,

questions to consumers who bought music CDs atconvenience stores and

questions to consumers who have never boughtmusic CDs at convenience stores

are skipped for the time limitation.

(C) Yamada & Kato 8

Respondents are asked to answer thequestions on their latest three favoriteartist/group’s CDs purchased:

•Name of artist/group•Title of New CD•Types of CD: single, album•Purchase Timings:

1. Reserved before the release day,2. one day before the release,3. on the day of release,4. from the second day to one week,5. after one week

withinoneweek

2.2. Questions by Individual Artist/Group

(C) Yamada & Kato 9

• Reasons of Purchase: 1. being the artist/group’s fan, 2. Being exposed frequently by media such as TV, Journal, etc., 3. Happened to find the new CD at a convenience store that one

wanted to buy, 4. Although he/she came to the convenience store for other

purposes, he/she found it and bought it impulsively, 5. Wanted to listen it while driving, 6. Bought it to listen during long business trip or travel, 7. Found a special deal only for a convenience store purchaser, 8. Convenience store is located closer to home than CD shop, 9. CD shop was not open, 10. Recommended by friends or acquaintances, 11. Bought for someone as a present, 12. Others ( ).

2.2. Questions by Individual Artist/Group (continued)

(C) Yamada & Kato 10

Conceptual Definition of Segments of Music CDPurchasers

Committed Fan:

Person who considersthe artist/groupessential andindispensable forone’s lifestyle.

Ordinary Fan:

Person who does notconsider the artist/groupessential andindispensable but doesconsider it making one’slifestyle rich to someextent.Non-Fan:

Person who has nospecial interest to theartist/group.


Operational Definition of Segments of Music CDPurchasers

Committed Fan:

Person who always buys theartist’s new CD regardless ofits type (single or album).

Person who always buys theartist’s new single CD (album,not always).

Person who always buys theartist’s new album CD (single,not always).

Ordinary Fan:

Person whosometimes buys theartist’s new singleor album CD.

Non-Fan:

Person who neverbuys the artist’snew single or albumCD for oneself butbuys for someone.


Expected Timings and Reasons for Each Segment

Timing of Purchase Reason of Purchase1. being the artist/group’s fan3. Happened to find the new CD at a convenience store that one wanted to buy

Ordinary Fan any time the rest

Non-Fan any time 11. Bought for a present

within one weekCommitted Fan

SegmentSegmentSegmentSegment


Relationship between the segments of purchasers andpurchase timings

All ArtistsAll ArtistsAll ArtistsAll ArtistsSegmentSegmentSegmentSegment

Committed FansCommitted FansCommitted FansCommitted Fans 440440440440 74.5%74.5%74.5%74.5% 151151151151 25.5%25.5%25.5%25.5% 591591591591 53.0%53.0%53.0%53.0%Ordinary FansOrdinary FansOrdinary FansOrdinary Fans 191191191191 48.4%48.4%48.4%48.4% 204204204204 51.6%51.6%51.6%51.6% 395395395395 35.4%35.4%35.4%35.4%Non-FansNon-FansNon-FansNon-Fans 49494949 38.0%38.0%38.0%38.0% 80808080 62.0%62.0%62.0%62.0% 129129129129 11.6%11.6%11.6%11.6%

TotalTotalTotalTotal 680680680680 61.0%61.0%61.0%61.0% 435435435435 39.0%39.0%39.0%39.0% 1115111511151115 100.0%100.0%100.0%100.0%

TotalTotalTotalTotalNumber of purchasersNumber of purchasersNumber of purchasersNumber of purchasers

within one week within one week within one week within one week Number of purchasersNumber of purchasersNumber of purchasersNumber of purchasers

after one weekafter one weekafter one weekafter one week

Top Five ArtistsTop Five ArtistsTop Five ArtistsTop Five ArtistsSegmentSegmentSegmentSegment



Number of purchasersNumber of purchasersNumber of purchasersNumber of purchasers Number of purchasersNumber of purchasersNumber of purchasersNumber of purchasersTotalTotalTotalTotal

within one week within one week within one week within one week after one weekafter one weekafter one weekafter one week

Committed fans who bought within one week for top fiveartists whose CDs are more eagerly wanted than thoseof all artists increased by 6.2%.


Chi-square Test

dfdfdfdf p-valuep-valuep-valuep-value

All ArtistsAll ArtistsAll ArtistsAll Artists 2222 100.20283100.20283100.20283100.20283 1.74274E-221.74274E-221.74274E-221.74274E-22 Reject HReject HReject HReject H0000

Top Five ArtistsTop Five ArtistsTop Five ArtistsTop Five Artists 2222 35.3349835.3349835.3349835.33498 2.12377E-082.12377E-082.12377E-082.12377E-08 Reject HReject HReject HReject H0000

2χ

H0: The segments of purchasers and purchase timingsare independent.

HA: The segments of purchasers and purchase timingsare dependent.


Relationship between the segments of purchasers andpurchase reasons

* 1. being the artist/group’s fan, 3. Happened to find the new CD at aconvenience store that one wanted to buy




TotalTotalTotalTotal1, 31, 31, 31, 3****

other than 1&3other than 1&3other than 1&3other than 1&3

Reasons of PurchaseReasons of PurchaseReasons of PurchaseReasons of Purchase

Chi-square Test

H0: The segments of purchasers and reasons of purchase areindependent.

HA: The segments of purchasers and reasons of purchase aredependent.


All ArtistsAll ArtistsAll ArtistsAll Artists 2222 243.01397243.01397243.01397243.01397 1.69898E-531.69898E-531.69898E-531.69898E-53 Reject HReject HReject HReject H0000

2χ


Relationship between the segments of purchasers andtypes of CD purchased (single or album).

H0: The segments of purchasers and types of CD are independent.

HA: The segments of purchasers and types of CD are dependent.




Types of CD PurchasedTypes of CD PurchasedTypes of CD PurchasedTypes of CD PurchasedSingleSingleSingleSingle AlbumAlbumAlbumAlbum

TotalTotalTotalTotal


All ArtistsAll ArtistsAll ArtistsAll Artists 2222 10.6516010.6516010.6516010.65160 0.004860.004860.004860.00486 Reject HReject HReject HReject H0000

2χ


( ) ( ) tpt

bwt eememYct

+−+

−= −− 11 α

3. Sales Forecast by a Structurally Synthesized Model

Cumulativeunit sales

Committed fans Ordinary fans

Errorsincludingnon-fans

Eagerly-wantedgoods

Non eagerly-wanted goods

Exponential (Bass)model

Weibull model

mw: Potential market size of committed fans

mb: Potential market size of ordinary fans

Assumedto beconstant.


The NLIN Procedure

　　　　　　　　　　　　　　　　　　　　Approx　　　　　　　　 Approximate Parameter Estimate Std Error　　　　 95% Confidence Limits

mw 　　　　1541.1 70.2005 1400.2 1682.1 c 　　　　　　　　 0.5953 0.0452 0.5046 0.6860 a 　　　　　　　　 17.8214 3.3998 10.9960 24.6469 mb 809.3 74.3681 660.0 958.6 p 0.3264 0.0329 0.2604 0.3925

6560.2350.41541.1

809.3 1541.1 1541.1

mmm

bw

w ==+

=+

An Example of Model Fitting

ModelModelModelModel DFDFDFDF SSESSESSESSE Adjusted RAdjusted RAdjusted RAdjusted R2222 AICAICAICAIC

WeibullWeibullWeibullWeibull 53535353 46039.246039.246039.246039.2 0.9942980.9942980.9942980.994298 169.2169.2169.2169.2ExponentialExponentialExponentialExponential 54545454 467120467120467120467120 0.943220.943220.943220.94322 223.6223.6223.6223.6SynthesizedSynthesizedSynthesizedSynthesized 51515151 16437164371643716437 0.997890.997890.997890.99789 148.2148.2148.2148.2


0

50

100

150

200

250

300

350

400

450

500

0 10 20 30 40 50 60

UNITUNITUNITUNITeuniteuniteuniteunitewunitewunitewunitewunitebunitebunitebunitebunit

A005A005A005A005


• Now, we can estimate the potential market sizes(mw, mb) of committed fans and ordinary fansevery time when a new music CD is released.

• Therefore, we can obtain a decomposed lifecyclealong with an artist/group’s growth like thetechnology generation (Bass and Bass 2001).

• As an example, if we assume that ordinary fansdiffuse like a normal curve within a shorterperiod of time than committed fans, then we canhave following expository decomposed lifecycle.

4. Artist/Group’s Lifecycle


Artist/Group Expository Decomposed Lifecycle

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

0 5 10 15 20 25

Cummulative Sales ofEach CD (mw+mb)

Ordinary Fans (mb)

Committed Fans (mw)


1988/9/21

1989/5/21

1989/10/21

1990/2/21

1990/6/21

1990/11/7

1991/05/29

1991/11/27

1992/10/28

1992/12/09

1994/03/02

1995/11/22

1996/11/25

1997/11/19

1999/07/14

2000/12/06

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1988/1/11988/12/311989/12/311990/12/311991/12/311992/12/301993/12/301994/12/301995/12/301996/12/291997/12/291998/12/291999/12/29

Cummlative Sales of Album CDs (A01)

1990

/2/2

119

90/5

/25

1990

/6/1

319

90/1

0/3

1990

/10/

2419

91/3

/27

1991

/10/

30

1992

/5/2

719

92/1

0/7

1993

/3/1

719

93/6

/2

1994

/2/9

1994

/11/

21

1995

/5/3

119

95/7

/719

95/1

0/11

1996

/3/6

1996

/5/1

5

1997

/3/5

1997

/7/9

1997

/10/

819

98/4

/819

98/7

/8

1999

/6/9 20

00/2

/920

00/5

/24

2000

/7/1

220

00/1

0/4

2001

/3/1

420

01/8

/8

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1990/

1/1

1991/

1/1

1992/

1/1

1992/

12/31

1993/

12/31

1994/

12/31

1995/

12/31

1996/

12/30

1997/

12/30

1998/

12/30

1999/

12/30

2000/

12/29

2001/

12/29

Cummlative Sales of Single CDs (A01)

ObservedLifecycle


1999/01/01

1999/11/102000/09/27

2002/01/01

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1998/07/24

1999/02/09

1999/08/28

2000/03/15

2000/10/01

2001/04/19

2001/11/05

2002/05/24

Cummulative Sales of Album CDs (A02)

1998/04/08

1998/06/10

1998/08/05

1998/10/07

1998/12/09

1999/02/10 1

999/04/14

1999/05/12

1999/07/14

1999/08/11

2000/04/26

2000/05/17

2000/06/07

2000/12/13

2001/01/31

2001/03/07

2001/05/16

2001/07/11

2001/09/27

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1998/01/05

1998/07/24

1999/02/09

1999/08/28

2000/03/15

2000/10/01

2001/04/19

2001/11/05

2002/05/24

Cummulative Sales of Single CDs (A02)

ObservedLifecycle


Managerial Implications

• The artist/group decomposed lifecycle givesthe manager the trend and current informationwith regard to the respective potential marketsize in absolute/ratio form so that the managercan design his/her marketing strategiesintelligently.


5. Summary, Limitations and FutureStudies• We have studied the buying behaviors of music

CD purchasers at convenience stores throughthe internet questionnaire survey.

• We found three segments of CD purchasersand a strong dependency between thesegments of purchasers and purchase timings.

All ArtistsAll ArtistsAll ArtistsAll Artists Number of purchasersNumber of purchasersNumber of purchasersNumber of purchasers Number of purchasersNumber of purchasersNumber of purchasersNumber of purchasersSegmentSegmentSegmentSegment within one week within one week within one week within one week after one weekafter one weekafter one weekafter one week

Committed FansCommitted FansCommitted FansCommitted Fans 74.5%74.5%74.5%74.5% 25.5%25.5%25.5%25.5% 53.0%53.0%53.0%53.0%Ordinary FansOrdinary FansOrdinary FansOrdinary Fans 48.4%48.4%48.4%48.4% 51.6%51.6%51.6%51.6% 35.4%35.4%35.4%35.4%Non-FansNon-FansNon-FansNon-Fans 38.0%38.0%38.0%38.0% 62.0%62.0%62.0%62.0% 11.6%11.6%11.6%11.6%

TotalTotalTotalTotal 61.0%61.0%61.0%61.0% 39.0%39.0%39.0%39.0% 100.0%100.0%100.0%100.0%

TotalTotalTotalTotal


• Therefore, the existence of eagerly wantedgoods are behaviorally confirmed.

• Based on these finding, a structurallysynthesized model is proposed and it fitsbetter on the sales data of music CD.

• Also, the potential market size of therespective segment can be estimated andthey can be used for managerial purposes.

5. Summary, Limitations and FutureStudies (continued)


• Since we have investigated only one set ofCD sales data, we need to do it with moredata for a number of artist/groups. Thenwe can have real decomposed lifecycles.

• More elaborations on the artist/group’slifecycle are needed.

5. Summary, Limitations and FutureStudies (continued)


ReferencesBass, Portia Isaacson and Frank M. Bass (2001) “Diffusion of Technology Generations: A Model of Adoption and Repeat Purchases. http://www.basseconomics.com/WorkingPapers/f-wp.htmGatignon, Hubert and Thomas S. Robertson (1985), “A Propositional Inventory for New Diffusion Research,” Journal of Consumer Research, 11(March), 849-867.Yamada, Masataka, Ryuji Furukawa and Hiroshi Kato (2001a), “Sales Forecast of Music CDs in Convenience Store Environment,” Marketing Science Conference 2001, Wiesbaden Germany, p. 208, http://www.kyoto-su.ac.jp/~myamada/Wiesbaden/sld001.htmYamada, Masataka, Ryuji Furukawa and Hiroshi Kato (2001b) "A Conceptual Model for Adoption and Diffusion Process of A New Product and An Eagerly Wanted Product," Review of Marketing Science , WP No :2001526, Vol. 1, The School of Management at The University of Texas at Dallas, http://roms.utdallas.edu/PDFfiles/manu26.pdf


Figure 8 Adoption and Diffusion Processes of New Products

Announcement AwarenessIntroduction

Knowledge Attitude Action (Adoption)

Marketing MixSetting

Note that this conceptual model is made to answer the question of why different diffusion patterns from S-shaped curve toJ-shaped curve exist.

: things that influence an indivisual person's adoption decision: things that firms influence an indivisual person's adoption decision or things that are given

Marketing MixAdjustment

Time to act fromadoption decision1/Value at the time ofadoption decision

∝∝∝∝

Value at the time ofadoption decision Initial value /Perceived risk∝∝∝∝

PerceivedriskInformation,

InvolvementWord-of-mouthcommunications

Review, Publicity

AdvertisementTie-up with multiplemediaPrice decreasing,Sample offering

Decision(Intention)

Initial value(Attractiveness)Excitement/InnovativenessPerceived characteristics ofInnovativeness: Relativeadvantage, Compatibility,Complexity, Trialability,Observability

PriceCountry, Region,Organization, Firm brandPopularity: Director, Star,Producer, Songwriter,Composer, Artist

Series, Junior

Speed of supplyresponse: product,manufacturing,distribution,cyberspace

Personality andattitudes: fivecategories ofadopters,Lifestyle

Inventory of similarproducts, Existenceof competingproduct categories

Product characteristics Market characteristics

②

③

①

http://roms.utdallas.edu/PDFfiles/manu26.pdf


0.010.020.030.040.050.0

1 11 21 31 41 51

ALBUM: Average Absolute Percentage Errors, n=121

t=day

Average of 's(%)

Bass

Weibull

=Cumulative Sales at t

=fitted value for

Absolute Percentage Error:

tttt Y/YYe)

−=100

tY)

tY

te

tY

a structural analysis of sales patterns of music cdsmyamada/m. yamada mktsc 2002 u of albert… ·...

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