Advances in technology have transformed the world of research, opening opportunities to interact with consumers in ways that weren’t available even a few years ago. This is especially true for Choice-Based Modeling research (also known as Conjoint), which has benefitted from developments in software technology that make it easier to understand how to optimize offerings in complex situations where there are many moving parts.
While Choice-Based modeling has been around for over 40 years; only within the past several years have new approaches evolved to a place where we can truly allow consumers and decision-makers to customize options in a realistic, dynamic way. Radius has had the privilege of being on the front lines for rolling out the most powerful of these new approaches: Menu-Based Choice (MBC) modeling.
MBC pushes conjoint to new levels by allowing us to expose respondents to complex scenarios where they can consider many options at one time to build product or service bundles to best meets their needs.
The net result of this is an enhanced, more effective means for determining which bundles your company should offer, which product configurations you should build, and what collections of products or services you should combine/cross-promote to maximize demand.
MBC uses analyses like cross-elasticity modeling, multi-product selection, and customization modeling to better address business objectives, such as:
- Understanding what product or service configurations yield the highest revenue per customer within a portfolio of offerings,
- Determining which features or services should be put together in pre-set bundles versus which should be part of an a la carte offering,
- Assessing the impact that the presence or absence of different features or services on demand (i.e. – does demand spike when certain things are offered at the same time, do certain options lead to greater cross-purchasing across a portfolio, etc.), or
- Identifying which features/incentives will maximize the sale of the most profitable items within a product line.
Some examples of how businesses have used MBC to guide decisions include:
- A Technology Company has consumers in the market for new computers build their ideal models from scratch. Consumers select everything from screen size to processor, operating system to memory, while prices upda te based on their selections. In return, the company determines what the most profitable baseline PC models are, what types of features are most preferred, and at what prices revenue can be maximized.
- A Communication Services Provider uses Menu-Based Choice to examine pre-set bundles in the context of a la carte offerings to see if their bundles are optimal or if different, more profitable scenarios are worth considering. As a result, they determine which features must be bundled together, what price point different bundles should use to distinguish between tiers of service, and what add-ons should be leveraged to encourage upsell.
- A Financial Services Provider finds out what consumers need in an online savings account or credit card by having them complete an exercise where they select features like minimum deposits, level of ATM access, bill pay preferences, etc. This helps them decide exactly what to feature on their website and direct email marketing campaigns to encourage new customers to sign up for an online savings account.
- A Healthcare Technology Provider interviews doctors and nurses who are the end-users of a new type of medical technology, and allows them to configure their optimal set of features for this product. This helps the manufacturer understand exactly what specialized medical professionals need in this type of technology, how they would use it, and what role, if any, price plays in their decision-making.
These examples illustrate only some of the ways that MBC can guide you towards better bundle and offering configurations, regardless of whether you’re in a B2C or B2B environment. While MBC provides a simple and easy to use interface for respondents, it taps into the richness and complexity inherent to constantly expanding product and service offerings in the marketplace. And perhaps most importantly, it allows researchers to stay on top of those changes.
Please contact us if you’d like to learn more and understand how MBC can help address your needs.