Negative Binomial Distribution (NBD) model

Marketing dictionary

Negative Binomial Distribution (NBD) model

A probability mixture model representing the frequency and timing of product purchases, primarily applied to frequently purchased consumer goods. It assumes that sequential purchases made by an individual occur randomly in time, and also assumes that purchase rates have a gamma distribution across individuals (Ehrenberg 1972; Greene 1982). With these two assumptions the distribution for the number of purchases made by a randomly chosen set of customers in a fixed time period has the negative binomial distribution. The model can be used to predict future purchase patterns for customers with a given purchase history (Morrison and Schmittlein 1981). Source: AMA

See: Brand Choice Models

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