To be a winner in the market place, Marketers need to get an insight into the consumer’s mind and understand what drives their preference for a particular product. In today’s competitive world, it is imperative for companies to use a scientific research approach such as Discrete Choice Modeling to develop better understanding of customer preferences.  

Discrete Choice Modeling is an advanced analytics technique that helps to lend competitive edge to Marketers by helping them predict how consumer preferences or markets will alter to changes in price, features, or other attributes. This modeling technique is effective for:

• Product or Service features optimization – Designing an optimal combination of product/service features to gain maximal market share

• Assessing Pricing Strategy – Determine price elasticity of demand & understanding price sensitivity for features

• Forecasting demand for new product & services

• Market Segmentation – Identification of high potential segments based on individual preferences for features/benefits 

Discrete choice models are used not only for the representation of choice behavior in existing markets, but can also predict changes in behavior (and market shares) under hypothetical market scenarios, such as the introduction of a new product or service.

At AbsolutData, we have a broad base & extensive experience of conducting discrete choice analysis using Internet surveys. Using Discrete Choice Analysis, we have helped numerous clients to understand the relationship between the likelihood of choosing an alternative & the attributes or benefits that characterize that alternative. We have successfully used this modeling technique to assess customer preferences by utilizing estimates of utility that customers place on different features or benefits of a product.  

Discrete choice models have a number of advantages over traditional conjoint analysis:

 

• It is a more realistic exercise for individuals to indicate which product they would purchase rather than rating/ranking since this is what they actually do in the marketplace

• Discrete choice exercises can be designed to allow different features & different price ranges for different products

• Products can be evaluated in a competitive context – respondents can choose from a set of alternatives rather than evaluating the alternatives one at a time

• In discrete choice, individuals can be given the option to select “none” of the products, thus indicating that they do not find any of the products appealing