An Empirical Validation of Conditional Trend Analysis Software

This study validates a spreadsheet for conditional trend analysis (CTA). CTA was introduced by Goodhardt and Ehrenberg (1967) as an extension to the negative binomial distribution. It predicts the purchase rate of consumers in a subsequent period, based on their current period purchase class (zero buyers, bought once, twice and so forth). These predictions allow companies who use panel data to benchmark and track buying behaviour over time. For example, how much attrition in purchase rates for “heavy buyers” is to be expected? CTA will provide the answer. There have been no easily available tools to apply CTA, limiting research in this area, until recently an appropriate spreadsheet was developed. In this paper we test the validity of the spreadsheet’s calculations, using three datasets reported in Goodhardt and Ehrenberg (1967). We find that the spreadsheet yields similar results to the original study, demonstrating that the spreadsheet can be used with confidence to spur research in this under-developed area.