The NBD-Dirichlet model for Italian sparkling wines: understanding competitive relationships among brands

Abstract The NBD-Dirichlet model is applied to describe the Italian market of sparkling wines by means of repeated purchases recorded by a sample of families over two years. Sparkling wine is a convenience good with a moderate level of involvement, high frequency of purchase and low perceived differentiation. The Italian market of sparkling wine is characterized by a large number of brands proposing similar products offered in supermarkets. This very large assortment represents a very particular situation, both in terms of sales strategies and consumer purchasing behavior. This specific type of market can be well represented by the NBD-Dirichlet model to obtain analyses that explain the competitive dynamics among brands and their relative performance. Results of model estimation identified at least three groups of brands with different positioning in the market. Managerial implications of these results are linked to the possibility for each single brand to compare actual performance with that estimated by the model and with competitors belonging to the same segment.