| How do consumers decide which products to buy? Can I raise the price of my products and still maintain my market share? Which new product option will sell the best in my market? Questions such as these are not uncommon for the marketer.
Predictive modeling is crucial when attempting to uncover indices of consumer behavior, whether it be how much a product should sell for or identifying attributes which drive customer satisfaction. Like most techniques, predictive models can take many forms, ranging from simple regression applications to full profile conjoint analysis and discrete choice models.
The following are illustrative applications of one of these tools, conjoint (or trade-off) analysis.
Applied Conjoint Analysis
Conjoint, or trade-off, analysis can be a powerful tool for the marketer, typically used when the research question concerns product or service development issues or pricing strategies.
By asking respondents to "trade-off" one product feature to obtain another, conjoint unearths the importance of product features to consumers' purchase decisions, and calculates the particular combination of price and specific product features which maximize a product's appeal to consumers.
We have developed procedures to enhance the standard approach and so improve its actionability. Several illustrative models are:
Agriculture
A conjoint analysis was used to develop a new product line of animal feed. Our technique created a sophisticated statistical model which adjusted the conjoint outputs to increase the predictive power of the standard conjoint approach. The client successfully used the model with numerous national accounts.
General Consumer
A trade-off analysis revealed the decision factors underlying consumer purchase of replacement windows and lighting panels. The analysis provided an estimate of price elasticity and indicated the pricing strategy that would effectively increase revenue over current levels.
Physician Choice
A key concern of any managed care organization is how to ensure that the "right" physicians are participating in its plan. Our model merged two separate designs to address the complex issue of physician contracts. The model indicated which contractual agreements were highly attractive to physicians and showed how to structure contracts so as to appeal to those physicians, desired by the organization.
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