We develop a comprehensive utility maximizing framework to study the i
mpact of marketing variables on the category purchase, brand choice an
d purchase quantity decisions of households for frequently purchased p
ackaged goods. The model allows for dependence among the three decisio
ns while ensuring that these decisions provide, in combination, the gr
eatest possible utility to the household. By accounting for variations
in reservation prices and intrinsic brand preferences across househol
ds, the modeling framework explicitly captures the effects of unobserv
ed heterogeneity on all three purchase decisions. The principal empiri
cal finding from analyzing the A. C. Nielsen data for the yogurt produ
ct category is that the substantive implications for the effects of ma
rketing variables are sensitive to whether these effects are determine
d conditional or unconditional on a product category purchase. Our res
ults show that reservation prices and intrinsic brand preferences vary
across households, and not accounting for these variations in the est
imation could lead to biased estimates for the coefficients of the mar
keting variables. A comparison of our results to those obtained from a
nested logit model of purchase incidence and brand choice reveals tha
t our proposed model performs better using both a formal statistical t
est as well as the criterion of predictive validity in a holdout sampl
e of panelists. Further, the purchase quantity model compares favorabl
y with two alternative models of quantity choice in the validation sam
ple.