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Validating Gravity-Based Market Share Models Using Large-Scale Transactional Data.

Yoshihiko Suhara1, Mohsen Bahrami1,2, Burcin Bozkaya2,3

  • 1The Media Lab, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA.

Big Data
|March 19, 2021
PubMed
Summary
This summary is machine-generated.

This study validates the Huff gravity model using real transactional data, confirming its effectiveness for retail sales estimation and store location analysis across various business types. Demographic diversity enhances model accuracy.

Keywords:
Big Data analysisHuff modelbehavioral analyticscustomer patronage behaviormarket share

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Area of Science:

  • Marketing Science
  • Spatial Analysis
  • Retail Analytics

Background:

  • Customer patronage behavior is crucial for market share modeling, retail sales estimation, and competitive location analysis.
  • Traditional methods rely on surveys, but Big Data offers more realistic insights into consumer decision-making.
  • The Huff gravity model is widely used but lacks validation with real-world transactional data.

Purpose of the Study:

  • To introduce a novel approach for validating the Huff gravity market share model.
  • To utilize a large-scale transactional dataset for empirical validation.
  • To assess the model's applicability across different regions and merchant categories.

Main Methods:

  • Validation of the Huff gravity model using a comprehensive regional transactional dataset.
  • Analysis of customer patronage behavior data.
  • Regression analysis to identify factors influencing model validation.

Main Results:

  • The Huff model demonstrates a strong fit for modeling customer shopping behavior in categories like grocery, clothing, gas stations, and restaurants.
  • The model's validation is significantly strengthened by demographic diversity features, such as gender and marital status diversity.
  • Empirical evidence supports the viability of gravity-based market share models.

Conclusions:

  • The Huff gravity model is a viable tool for retail sales estimation and competitive facility location when validated with real transactional data.
  • Demographic diversity is a key factor influencing the accuracy of gravity-based market share models.
  • This data-driven approach facilitates the application of the Huff model in diverse retail contexts.