Testing the Trade-offs

Page 1

choice modeling

Image courtesy of Powell’s Books.

coreconcepts

Testing the Trade-offs Choice modeling mimics real-life consumer decision-making to help marketers position their product offerings for success. Experts explain the concept and how to put it into practice. By Christine Birkner | senior staff writer

 cbirkner@ama.org

W

hen marketing researchers want to survey potential customers about potential new products, features or package designs, it’s helpful to simulate realworld purchasing behavior, wherein consumers must make trade-offs on specific product attributes when deciding whether to make a purchase. One way to do that is through choice modeling,

10

which measures consumers’ preferences for product characteristics by showing them several product profiles, often side by side, and asking them either to give a rating to each one, or to choose the product that they most likely would purchase. Choice modeling was invented in the 1920s, but it started being used in marketing research in the 1970s. Today, most marketing practitioners

rely on automated software to set up the research. First, you must decide which product features to test, and software will help you rank the importance of each feature. “On the back end, we’re able to put the pieces together to show a preference for any possible combinations. That might be thousands or millions. The more attributes we’re considering in the model, the more we include, the more complex the design becomes, which means we’ll show more choice scenarios,” says Jay Heyboer, vice president of Morpace Inc., a Farmington Hills, Mich.-based market research and consulting firm. Choice modeling can help you explain the choices that people make with models that tell you the probability that a person would choose one good versus another, says Greg Allenby, professor of marketing and statistics at The Ohio State University in Columbus, Ohio.

marketing news | March 2015

MN Mar 2015 1-65-edit-2-19-15.indd 10

2/20/15 2:58 PM


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.
Testing the Trade-offs by Christine Birkner - Issuu