In Advanced Analytics: Bringing innovation to the brand portfolio, we outlined how priority scoring helps a brand identify consumer needs that could be solved through an offering that is designed to solve these needs. Once the brand team has a priority scoring matrix, the goal is to optimize products and the portfolio to ensure meaningful sales and revenue growth.
Choosing the right choice model, where consumers express preferences for attributes and features, is critical to helping the brand team find answers to these strategic issues:
- How do we optimize our product line to maximize share or revenue?
- How important is brand versus price (and other features) in the decision process? Which ones have the greatest impact on purchase?
- What options are most preferred within a particular feature?
- What product factors are consumers willing to trade off?
- What is the optimal communication strategy that combines the overall message and proof points?
Below is an overview of the 4 types of choice models that can help brand teams effectively tackle these business issues, along with the strengths and drawbacks of each:
Discrete Choice
Consumers are asked to perform a series of tasks to select a single product/service in each choice set.
Strengths
- Works well when individuals purchase a single product
- Easy for respondents to complete (assuming a moderate number of attributes)
Drawbacks
- Doesn’t handle a large number of attributes
- Doesn’t allow for customization like Menu-based
- We collect little “information” in each choice question
Allocation
Consumers are asked to allocate the number or % of purchases they make across different product or offering alternatives.
Strengths
- Works well in situations where individuals may purchase multiple products
- Provides more data/responses than discrete choice (in a single question)
Drawbacks
- A little more difficult & time consuming for respondents to complete (vs. discrete choice)
- Some respondents may have difficulty completing the task
- Doesn’t handle a large number of attributes
Adaptive Choice
This model is designed to have consumers focus on what’s most valued and forces difficult trade-offs. The adaptive approach creates a more realistic experience for the respondent by focusing on the features that are most critical to them.
Strengths
- Effective with larger numbers of features
- Engaging to the respondent
- Provides more accurate data (esp. with large # of attributes)
Drawbacks
- Takes longer to administer
- Generally should specify price points for initial build your own exercise
- Slightly higher costs
Menu Based
Consumers are asked to configure a “shopping basket” purchase based on a single occasion, from a menu of options, and repeat it multiple times.
Strengths
- Flexibility to address issues previously unanswered
- Realistic respondent task
- Customized screen layout
- Likely decreased questionnaire length
Drawbacks
- Complexity of design
- Requires much larger sample size
- Increased programming costs
So how does a brand team decide which is the optimal choice model to solve a specific business issue:
- Discrete Choice is the best choice if number of attributes/levels is reasonable
- Allocations is best for studies where different consumer types exist and important to capture variety or “niche” products
- Adaptive is preferred if there are a large number of attributes/levels (10+) and more than one base concept
- Menu-based is best with relatively large number of attributes as buyers can choose multiple items at a time and/or bundles
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