The Guadagni Little index is 1983 a developed characteristic number for the collection of brand loyalty. In addition the mark choice of the examined buyer is determined with several purchases following on it.

The formula for the Guadagni Little index \ to a certain purchase act t looks rho_t as follows:

\ rho_t: = \ alpha \ rho_ {T-1} + (1 \ alpha) X_t

X_t is equal 1, if to so far the mark bought at the most frequent one also with the current purchase act one seized, otherwise 0. Thus X_t is a boolean variable.

How is to be recognized easily, this index is recursively computed by means of exponential smoothing: The index for the current purchase act (thus \ rho_t) becomes from the mark choice with the current act and from the index value with the previous purchase act (speak: \ rho_ {T-1}) calculates.

With a perfectly mark-unfaithful buyer (uniform distribution of the purchases over all marks) the Guadagni Little index reaches the value 0, during with a perfectly mark-faithful buyer (always to the same mark seizes) its value with 1 lies.

The value \ alpha~ (\ alpha \ in [0; 1]) is a weighting factor: The more highly it lies, the more strongly flows past purchases into \ rho_t. A suitable value for \ alpha must be selected on use Gaudagni Little index of the research question accordingly.

In the market study the Guadagni Little index is relatively frequently used. Since it considers however only the mark bought at the most frequent one, its validity is only moderate.

Articles in category "Guadagni Little index"

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