Authors are arranged in reverse alphabetical order. Disentangling Preferences, Inertia and Learning in

The forces that influence a consumer in brand choice: preferences, experiences, and marketing mix have been of great interest to marketing scientists. The vast literature based on static survey data points to consumers using multi-attribute utilities in making a choice. At the same time the vast literature of scanner panel data based studies points to the existence of state dependence (in various functional forms) in brand choices in frequently purchased product markets. Using a unique dataset that contains stated preferences (survey) and actual purchase data (scanner panel) for the same group of consumers we attempt to untangle the effects of preference heterogeneity and state dependence, and to determine the exact nature of the latter. We propose a hierarchical model in which consumers within the same product category are heterogeneous in the order of the brand choice process and its parameters as well as in their preferences and responsiveness to marketing mix. The proposed model is designed to encompass side by side three different types of consumer experience based behavior: zero-order, inertia and learning. Two sources of state dependence, inertia and learning