Method and system for estimating price elasticity of product demand
First Claim
1. A computer-implemented method for determining an estimated demand for each product in an origin-destination pair comprising the steps of:
- determining a product demand share for a product in a category of the origin-destination pair;
determining a category demand share for the category based on a proposed weighted average price for the category, a long-term demand share history for the category, and a short-term demand share history for the category; and
determining the estimated absolute demand for the origin-destination pair based on a proposed weighted average price for the origin-destination pair, a long-term demand history for the origin-destination pair and a short-term demand history for the origin-destination pair.
8 Assignments
0 Petitions
Accused Products
Abstract
Estimating price elasticity of product demand assists an understanding of total demand for a product and a forecast of how the level of demand for that product will change based on a change in the price of the product. A multi-level hierarchical regression methodology can be used to forecast product demand, and thereby calculate price elasticity. The methodology accepts historical product sales, product prices, and revenue management controls of a company and predicts the estimated demand at the product level. This methodology can also accept the historical product sales, product prices for the company and its competitors, revenue management controls of a company, and an estimate of the revenue management controls of its competitors to predict the estimated demand at the product level.
-
Citations
52 Claims
-
1. A computer-implemented method for determining an estimated demand for each product in an origin-destination pair comprising the steps of:
-
determining a product demand share for a product in a category of the origin-destination pair;
determining a category demand share for the category based on a proposed weighted average price for the category, a long-term demand share history for the category, and a short-term demand share history for the category; and
determining the estimated absolute demand for the origin-destination pair based on a proposed weighted average price for the origin-destination pair, a long-term demand history for the origin-destination pair and a short-term demand history for the origin-destination pair. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31)
-
-
32. A computer-implemented method for determining an estimated absolute demand (D) for an origin-destination pair (OD) comprising the steps of:
-
determining a product demand share (v) for a product (j) in a category (C) of the origin-destination pair;
determining a category demand share (E) for the category (C) based on a proposed weighted average price (a) for the category, a long-term demand share history (L) for the category, and a short-term demand share history (s) for the category using the formula
E=α
C+β
CaC+γ
CLC+η
CsC+ε
C Cε
OD; and
determining the estimated absolute demand (D) for the origin-destination pair based on a proposed weighted average price for the origin-destination pair (k), a long-term demand history (f) for the origin-destination pair and a short-term demand history (g) for the origin-destination pair using the formula
D=β
0+β
1k+β
2f+β
3g+ε
. - View Dependent Claims (33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48)
-
-
49. A system for estimating price elasticity of origin-destination product demand comprising:
-
a first information database for storing current inventory information describing products currently available to a consumer, wherein the inventory information includes long-term demand share history for an origin-destination pair, short-term demand share history for the origin-destination pair, long-term demand share history for a category of products in the origin-destination pair, short-term demand share history for the category of products in the origin-destination pair, historical demand share history for products in the origin-destination pair, a set of products for the origin-destination pair, a set of categories including one or more of the products for the origin-destination pair, and a revenue management effect for each product in the origin-destination pair;
a second information database for storing current and historical pricing patterns for the current inventory and a competitor'"'"'s current inventory;
a third information database for storing current information related to competitor products, wherein the information is retrieved from publicly available sources and the information is used to estimate the revenue management effect for a competitor'"'"'s product;
a competitive product evaluator coupled to the second information database for comparing the current inventory information to the competitor'"'"'s current inventory to determine at least one competitor product that is substantially equivalent to a product in the current inventory; and
a demand forecasting determiner coupled to the first information database, the third information database, and the competitive product evaluator for estimating a demand for a product in the category of the origin-destination pair. - View Dependent Claims (50, 51, 52)
-
Specification