# Markov model

Markov model | |
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See also |

**Markov model** - is widely used in studies of consumer behavior.

It is a stochastic model, describing the problem of decision-making under risk. Main assessment criterion are: income, gain or loss, time.

According to Markov model the behavior of consumers in the market is a continuous decision-making process, in which specific states are following one after the other in a given period of time. They are dependent on the specific state of consumer or environment preceding this process. So this model adopts a conditional probability of reaching the individual states or results.

## Elements of Markov model

- option or variant of choice (state),
- cycle (time) - the shorter the cycle, the more the model reflects the real situation,
- probability of transition from one state to the next state in a given unit of time.

## Application of Markov model

Markov model - is widely used in studies of consumer behavior. Is also used in the research of intentions to purchase goods, consumer preferences, order of purchase, goods substitution, needs etc.

This research is not very difficult and complicated, therefore, is often and willingly carried out in small companies.

## References

- Rabiner, L. R., & Juang, B. H. (1986).
*An introduction to hidden Markov models*. ASSP Magazine, IEEE, 3(1), 4-16.