Lapis Lazuli | Level 10

## determine if certain customer segment(s) are more price sensitive than other(s)

I would like to perform some basic statistical test to establish whether certain customer segments are more price sensitive than other. For each customer segment (CustomerSegmentId) I have samples of how many units were bought of one specific product (NumberOfUnits) at each price (Price). The data structure is as follows:

CustomerSegmentId Price ProductId NumberOfUnits

Certain customer segments have much lower samples than others, making it an unbalanced problem. This means that I should use PROC GLM rather than PROC ANOVA using code along those lines:

``````proc glm data = SomeData;

class CustomerSegmentId ProductId;

model NumberOfUnits

= Price CustomerSegmentId ProductId;

run;

quit;``````

I know that this community does not exist to answer statistical questions but the only site I am aware of Cross Validated:

https://stats.stackexchange.com/

is not very responsive (please suggest other sites).

Is the above a good starting point? Also how do I perform post hoc tests to answer questions as to whether CustomerSegmentId=1 is more price sensitive than CustomerSegmentId=2?

I also had a look at choice set approaches, which use for example logistic regression. Unfortunately, I only have observational data in this format:

TargetProductId ComparableProductId TargetPriceProductPrice ComparableProductPrice CustomerSegmentId TargetProductBought

1          2          23         25         1          0

1          3          23         25.50    1          0

1          4          23         21         2          1

Here we look at a target product at the time and we can establish if another comparable product of a customer was viewed. We know the price of the target product and the comparable product. We also know if the target product was bought by the customer belonging to a certain segment (TargetProductBought = binary).

Perhaps one could fit a logistic regression model using these product pair data (there would also be independent variables for each customer segment etc.)? I am aware of great publications by Warren F. Kuhfeld, e.g.:

https://support.sas.com/techsup/technote/mr2010f.pdf

but I am not sure whether my data described above could be used.

Any feedback would be very much appreciated. Thanks!

## Re: determine if certain customer segment(s) are more price sensitive than other(s)

You might want to move this topic to the SAS econometrics and Forecasting forum in the "analytics" group.  I suspect your most knowledgeable respondents will be over there.

One comment I would make though.  Your models as specified, regardless of post-hoc test choices, presumes a linear effect of price on demand.  If you have lots of price points, you probably should consider non-linear effects.

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