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A Study of the Time Varying Mean Replacement Age of Consumer Durables

Steffens, P.R. & Balasubramanian, S. (1998) A Study of the Time Varying Mean Replacement Age of Consumer Durables. In Marketing Science Conference, 10-13 July, Fontainbleau, France. (Unpublished)

Abstract

Forecasting category or industry sales is a vital component of a company’s planning and control activities. Sales for most mature durable product categories are dominated by replacement purchases. Previous sales models which explicitly incorporate a component of sales due to replacement assume there is an age distribution for replacements of existing units which remains constant over time. However, there is evidence that changes in factors such as product reliability/durability, price, repair costs, scrapping values, styling and economic conditions will result in changes in the mean replacement age of units. This paper develops a model for such time varying replacement behaviour and empirically tests it in the Australian automotive industry. Both longitudinal census data and the empirical analysis of the replacement sales model confirm that there has been a substantial increase in the average aggregate replacement age for motor vehicles over the past twenty years. Further, much of this variation could be explained by real price increases and a linear temporal trend. Consequently, the time varying model significantly outperformed previous models both in terms of fitting and forecasting the sales data.

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ID Code: 6521
Item Type: Conference Paper
Additional Information: Author contact details p.steffens@qut.edu.au
Keywords: Diffusion, Forecasting, Sales Models, Paul Steffens
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > MARKETING (150500) > Marketing not elsewhere classified (150599)
Divisions: Current > Research Centres > Australian Centre for Entrepreneurship
Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Management
Copyright Owner: Copyright 1998 (please consult the author)
Deposited On: 16 Mar 2007
Last Modified: 05 Jan 2011 23:30

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