Have you ever talked to consumers & they tell you that some feature is a really important part of a product, but if you watch them make their decisions, their behavior conflicts with what they told you?Such is the paradox of consumer decision making!Keep in mind that consumers aren’t trying to mislead you. Instead, understanding consumer decision making often requires us to dig below the surface – beyond what they might say – to what the actual (often sub-conscious) drivers are that they aren’t able to articulate. There are a number of research techniques IIM utilizes to help us to dig deeper & get to what is actually is driving decisions in the real world so we can help you to develop more consumer-relevant products. One of these is Discrete Choice Modelling.

In a nutshell, in a discrete choice study, your target consumer or customer is given a series of choices. Those choices are made up of different bundles of Features (such as product attributes) shown at different Levels of those Features that could be offered for a particular product – either within a competitive context or by itself. Consumers are shown different bundles of these Features at different Levels & asked to choose which they would buy. They can also choose to not buy any of them.

Through understanding their decisions across the series of choices they make, we gain an understanding of what they really want in the new product – and what they don’t. So you can develop a product with greater odds of success in the marketplace.

Which of these homes would you be most likely to buy?

House A House B House C
# Bedrooms 4 3 3
# Bathrooms 2 3 2
Acreage .2 acre 1 acre .5 acre
Age of Home 10 years 2 years 40 years
On a Cul de Sac Yes Yes No
Has an HOA No Yes No
NONE OF THESE
CHOOSE One  

An important point to note is that each Feature & Level can also have pricing associated with it.  When included, consumers are able to see the total item price when the Feature/Level is present so that the value of the feature can be taken into account when considering which they would actually buy. Earlier in the development process, the team may not have pricing and is often looking for broader direction, while later in product development, pricing can be key.

House A House B House C
# Bedrooms 4 3 3
# Bathrooms 2 3 2
Acreage .2 acre 1 acre .5 acre
Age of Home 10 years 2 years 40 years
On a Cul de Sac Yes Yes No
Has an HOA No Yes No
Price $399,999 $339,999 $229,999
NONE OF THESE
CHOOSE One

Note that when the product is shown with a competitive context, we can also take into account possible reactions by the competition to your product in the research design (such as increasing or decreasing their pricing).

In our example, we can see that the home’s price accounts for 46% of the choice, followed by the number of bedrooms.

In our example, we see that a product with 3 bedrooms is preferred 1.5 times over a house with 4 bedrooms.

All of these together get your team much closer to unraveling the paradox of consumer decision making so you are closer to their real world choices.

Advantages of Using Discrete Choice:

  • Approach is designed to simulate real-world decision making behavior, so gets closer to that reality than many other approaches.
  • Is a more realistic way to get at the relative importance of different features – without asking importance directly, which is often subject to error vs. reality
  • Excel simulator helps the research to live on and continue to be actionable in the ever-changing product development process

An experienced consultant from Insights in Marketing can help you dig deeper to understand what is at the heart of your consumer’s decision making process. Contact us today to learn more.

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