ConceptLAW

NBD-Dirichlet

Dirichlet · Dirichlet model · Dirichlet norms

The NBD-Dirichlet model is the mathematical model describing how often buyers purchase in a category and how they spread those purchases across brands. It combines two probability distributions: one for purchase frequency and one for brand choice. The best-known empirical marketing laws, including double jeopardy and duplication of purchase, fall out of this single model. Its power lies in prediction: knowing a brand's market share, you can predict loyalty figures, buying frequencies and overlap with competitors with surprising precision. This yields benchmarks, the Dirichlet norms, against which a brand's actual performance can be compared to spot genuine deviations from normal buying behaviour.

Covered in

A1-01 What Makes a Marketing Law a LawCore lecturestill locked

A1-02 Double Jeopardy — The First Lawstill locked

A1-03 Retention, Acquisition and the Leaky Bucketstill locked

A1-08 Duplication of Purchase and the Natural Monopoly Lawstill locked

A1-09 Price Promotions and Loyalty Programmes — What the Evidence Saysstill locked

A1-10 The Case Against Sharp — Limits, Critics and Boundary Conditionsstill locked

A1-11 The Ehrenberg-Bass Playbook, Appliedstill locked

A1-12 Penetration AND Loyalty — The Synthesisstill locked

A6-01 Why International Marketing Knowledge Is Different — The Meta-Openingstill locked

A6-05 Do Sharp's Laws Cross Borders?still locked

A6-08 Market Entry and the International Audit — Capstonestill locked