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Calculation of Parameter S for the Delischlé NBD Model

Author: tonagaiExecutions: 711
TOP/Shared Formulas (Engineering)/Business (General)

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We calculate the parameter S—which appears in the Dirichlet NBD model (commonly known as the Dirichlet model), used in mathematical marketing to represent the probability of purchasing a company’s own brand within a category—based on actual purchase rates of the company’s own brand.
The calculation uses the quasi-Newton-Roughson method (which replaces derivatives with differences).
Reference: “Strategic Thinking Based on Probability: The Power of Mathematical Marketing, Proven at USJ” (Tsuyoshi Morioka, Seiki Imanishi)
Maximum number of purchases in the "Calculate" category
Market Share of Our Own Brand
％
Average number of purchases per unit period: M
How many times the unit period? T
NBD’s K-parameter
Actual Purchase Rates for Our Own Brand's Unit Periods
％
Delischlé S-parameters 
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