Market Segmentation and Dynamic Analysis of Sparkling Wine Purchases in Italy

• Main Authors: Bassi, F. (Author), Pennoni, F. (Author), Rossetto, L. (Author)
• Format: Article
• Language: English
• Published: Cambridge University Press 2021
• Subjects: dynamic market segmentation; hidden Markov model; loyalty; repeated purchases; variety-seeking behavior
• Online Access: View Fulltext in Publisher

 The Italian market of sparkling wines increases as volume and assortment (such as brands, appellations, typologies) mainly because of sparkling Prosecco consumption. We investigate the repeated purchase behavior of sparkling wines in two years within the supermarket channel through scanner data collected from a consumer panel. We propose a Hidden Markov Model to analyze these data, assuming an unobservable process to capture consumers' preferences and allowing us to consider purchases sparsity over time. We consider multivariate responses defining types of purchases, namely price, appellation, and sugar content. Customers' covariates influence the initial and transition probabilities of the latent process. We identify five market segments, and we track their evolution over time. One segment includes Prosecco-oriented consumers, and we show that loyalty to Prosecco changes strongly over time according to the region of residence, income, and family type. The findings improve the understanding of the market and may provide evidence to design successful marketing strategies. (JEL Classifications: C33, C51, D12, L66). Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of American Association of Wine Economists.