The learning effects of brands: Determined through Markovian analysis of brand switching

Abstract

It is the learning effect that gives rise to brand loyalty for a repeat purchase product and is an important consideration in today’s competitive market. This paper aims at determining the learning effects of brands using Markovian analysis. The Markovian study of market stability involves construction of two transition probability matrices from the loss-gain matrix depicting the brand switching behavior of the customers in the forward and backward directions and the projection of those matrices over time. From the market stability in the forward and backward directions the learning effects, expressed in terms of acceptance line and rejection line, have been analytically obtained. For demonstration purpose, a set of information, available in the literature, on brand switching in the Indian oral care market has been used and learning effects have been empirically determined along with a discussion on managerial implications of the same. Since we have presented a generic approach it can be applied for any product field of any country subject to constraint that Markovian stability should be there in both forward and backward directions.