Market segmentation with choice-based conjoint analysis

Choice-based conjoint analysis has increased in popularity in recent years among marketing practitioners. The typical practice is to estimate choice-based conjoint models at the aggregate level, given insufficient data for individual-level estimation of part-worths. We discuss a method for market segmentation with choice-based conjoint models. This method determines the number of market segments, the size of each market segment, and the values of segment-level conjoint part-worths using commonly collected conjoint choice data. A major advantage of the proposed method is that current (incomplete) data collection approaches for choice-based conjoint analysis can still be used for market segmentation without having to collect additional data. We illustrate the proposed method using commercial conjoint choice data gathered in a new concept test for a major consumer packaged goods company. We also compare the proposed method with ana priori segmentation approach based on individual choice frequencies.     

Predicting new service adoption with conjoint analysis: external validity of BDM-based incentive-aligned and dual-response choice designs

In this paper, we compare the standard, single-response choice-based conjoint (CBC) approach with three extended CBC procedures in terms of their external predictive validity and their ability to realistically capture consumers’ willingness to pay: (1) an incentive-aligned CBC mechanism (IA-CBC), (2) a dual-response CBC procedure (DR-CBC), and (3) an incentive-aligned dual-response CBC approach (IA-DR-CBC). Our empirical study features a unique sample of 2,679 music consumers who participated in a conjoint choice experiment prior to the market entry of a new music streaming service. To judge the predictive accuracy, we contacted the same respondents again 5 months after the launch and compared the predictions with the actual adoption decisions. The results demonstrate that IA-CBC and DR-CBC both increase the predictive accuracy. This result is promising because IA-CBC is not applicable to every research context so that DR-CBC provides a viable alternative. While we do not find an additional external validity improvement through the combination of both extensions, the IA-DR-CBC approach yields the most realistic willingness-to-pay estimates and should therefore be preferred when incentive alignment is feasible.     

The no-choice option and dual response choice designs

Choice set designs that include a constant or no-choice option have increased efficiency, better mimic consumer choices, and allow one to model changes in market size. However, when the no-choice option is selected no information is obtained on the relative attractiveness of the available alternatives. One potential solution to this problem is to use a dual response format in which respondents first choose among a set of available alternatives in a forced-choice task and then choose among the available alternatives and a no-choice option. This paper uses a simulation to demonstrate and confirm the possible gains in efficiency of dual response over traditional choice-based conjoint tasks when there are different proportions choosing the no-choice option. Next, two choice-based conjoint analysis studies find little systematic violation of IIA with the addition/deletion of a no-choice option. Further analysis supports the hypothesis that selection of the no-choice option is more closely related to choice set attractiveness than to decision difficulty. Finally, validation evidence is presented. Our findings show that researchers can employ the dual response approach, taking advantages of the increased power of estimation, without concern for systematically biasing the resulting parameter estimates. Hence, we argue this is a valuable approach when there is the possibility of a large number of no-choices and preference heterogeneity.     

The Energy Paradox Revisited: Analyzing the Role of Individual Differences and Framing Effects in Information Perception

In the ongoing debate about the “energy paradox”, a recent stream of literature highlights the importance of behavioural anomalies such as bounded rationality and self-control problems. However, the role of individual-level factors in explaining the energy paradox is still not fully understood. Combining literature on behavioural anomalies and consumer heterogeneity, the current paper analyses how individual differences influence the perception of energy-related information and susceptibility to choice-framing effects. A choice-based conjoint experiment about energy-saving home improvements was conducted with 363 homeowners in Switzerland. Results show that numeracy and energy literacy have no influence on how much attention individuals pay to energy cost savings. However, impulsivity and risk aversion are found to significantly impact homeowners’ weighting of future energy cost savings. Further, it is found that impulsive homeowners are significantly more susceptible to energy cost-framing effects. A key implication for consumer policy is that general educational programs targeted at enhancing citizens’ knowledge and cognitive abilities are unlikely to increase energy conservation investments. The findings further suggest that consumer policies and business models aimed at reducing impulsiveness and influencing risk perception might foster the uptake of energy-saving measures in the residential housing sector.     

Effects of recommendation systems on consumer inferences of website motives and attitudes towards a website

Drawing on the theoretical framework of consumer inferences of marketer motives, we explore consumer responses to different types of product recommendation provided by an e-commerce website (i.e. recommendation systems, RS). The findings demonstrate that RS for alternative brands only are most likely to lead to the consumer inference of a consumer-serving motive, followed by RS for both alternative brands and additional products, and RS for additional products only. In turn, the consumer inference of a consumer-serving motive has a positive influence on attitude towards the website. However, the consumer inference of a firm-serving motive does not mediate the effect of RS type on attitude towards the website. Further, the effect of RS type on attitude towards the website occurs only for consumers low in interpersonal trust. Theoretical and managerial implications are also discussed.     

Prediction of choice in a technically complex,essentially intangible,highly experiential,and rapidly evolving consumer product

This study compares the effectiveness of the theory of reasoned action, the most well known attitudinal approach, with that of traditional conjoint analysis, the most popular utilitarian approach, in predicting choice among real brands of word processing software. Results suggest that traditional conjoint analysis has a significantly higher first choice hit rate than the theory of reasoned action. With products such as word processing software, a utilitarian approach may be better than an attitudinal approach for predicting consumer choice. © 1993 John Wiley & Sons, Inc.     

Preference for green packaging in consumer product choices – Do consumers care?

In this paper, consumer environmental choice is studied by analysing the relative importance of green packaging when compared with other relevant product attributes. The empirical study is based on a choice‐based conjoint analysis of preferences for functional drink products of a sample of 330 consumers using these products. Our choice‐based approach on environmental behaviour brings new insights to previous research, which predominantly relies on attitude models. Results indicate that consumers differ in their preferences for packaging, brand, price and convenience of use of daily products. In addition, various distinctive consumer segments can be identified on the market. Contrary to several previous studies, we found that the largest consumer segment, one‐third of consumers, favoured environmentally labelled packaging as the most important criteria in their choice. The findings emphasize the increasing importance of ethical and environmental dimension in product choices. We also propose that the attention in environmental consumer research should be shifted from general attitude studies towards the study of actual product choices.     

A Cross-Validity Comparison of Conjoint Analysis and Choice Models at Different Levels of Aggregation

Several (ratings-based) conjoint analysis and experimental choice (choice-based conjoint) models are compared on their ability to predict both aggregate choice shares among the sample and individual choices in an availability validation task. While there was a weak relationship between validations at the individual and aggregate levels, several models stand out. In general, models capturing individual differences validated well at both the individual and aggregate level. The hierarchical Bayes choice and conjoint models validated particularly well.Among choice models, the hierarchical Bayes choice model had the highest aggregate and individual level-validations. It was followed by the hybrid and seven segment latent segment choice models. Overall, the highest validating ratings-based conjoint model was the hierarchical Bayes model. However, the seven segment latent segment conjoint model produced better aggregate choice share validations than any other conjoint model. These results indicate that validations can be improved either by using benefit segment models and/or merging different types of data to estimate more individualized models.In most cases, rescaling improved the ratings-based, but not the choice-based choice share validations. This suggests that one might adjust for differences between ratings and choice tasks before making choice share predictions.     

The consumer experience: The impact of supplier effort and consumer effort on customer satisfaction

Existing research on experiential offers often examines the impact of such offers on consumers’ evaluations (e.g., customer satisfaction). Yet existing research has neglected that experiential offers typically involve effort from both the supplier and the consumer – and neglected that effort can influence evaluations. To address this gap, the present study examines the impact of supplier effort and the consumer's own effort on the consumer's evaluation of experiential offers in terms of customer satisfaction. Two experiments, comprising two different experiential offers, were carried out. In both experiments, supplier effort (low vs. high) and consumer effort (low vs. high) were manipulated. Customer satisfaction was the dependent variable. The results show that high supplier effort boosts customer satisfaction, and that the effects of consumer effort are either absent or indirect with a negative impact. Moreover, the results indicate that a supplier effort-consumer effort gap (i.e., the consumer perceives that the supplier has expended more effort than the consumer) contributes positively to customer satisfaction.     

Now that's a Bright Idea: The Influence of Consumer Elaboration and Distance Perceptions on Sustainable Choices

Integrating theory related to psychological distance and elaboration on potential outcomes, hypotheses are offered that predict that consumers’ elaboration levels moderate the effect of temporal distance on choice of energy efficient products. In three experiments, the authors examine the influence of temporal and psychological distance and the moderating effect of a consumer's propensity to elaborate on potential outcomes (EPO) in retail choice-based situations. Results support these predictions with consumers lower in elaboration more likely to choose an energy efficient product when perceived distance is proximal versus distal, while the distance effect has less of an influence on consumers prone to higher elaboration. We test the effect of distance perceptions within a retail lab environment, as well as across ad and retail contexts. These results will help marketers better understand how to promote products in ad versus retail-based contexts and across different consumer groups. Findings offer implications for theory, retailers, product marketers, and NGO's interested in promoting energy efficient choices.     

Cross-Cultural Consumer Behavior: Use of Local Language for Market Communication—A Study in Region Friuli Venetia Giulia (Italy)

Cross-cultural consumer behavior is of market interest due to globalization of marketplaces, migration, multicultural marketplaces, and diffusion in the EU of many languages. The objective of this study is to check whether the local language used in a marketing communication could affect the consumers’ preferences for food products. The theoretical foundation is the consumer motivational approach that goes deeper into motivations interfering with the consumers’ preference order. The multivariate conjoint analysis is used to evaluate the preferences for attributes described in different languages. A number of students from the University of Udine (located in the northeastern part of Italy) have been submitted to interviews to examine their preferences for a simulated sandwich package reporting information in different languages, distributed by vendor machine. The results suggest that the consumer’s reaction to local language depends on sociodemographic profile, cultural background, language knowledge, and family education, and the local language could actually be used as a market tool for market segmentation. These results are of interest to many EU countries with bilingual communities such as Spain, Belgium, the UK, Switzerland, and most of the Italian regions where local languages are still alive.     

Setting prices in mixed logit model designs

We investigate different procedures to set prices in designs for choice-based conjoint analysis using the mixed logit model which captures latent consumer heterogeneity. Besides discrete attributes, we include a linear price term in the deterministic utility function thereby treating price as continuous variable. We consider two different price intervals and several price sets which contain either two or three prices. We compare these alternatives to set prices by simulating choices for different constellations on the basis of the mixed logit model. Furthermore, we generate ten designs simultaneously instead of just one. Using these simulated choices, we estimate the parameters of the mixed logit model in the next step. To reduce the needed sample size and computation time caused by accounting for latent consumer heterogeneity, we apply Halton draws and set a minimum potential design for prior draws. ANOVA with root mean squared error between estimated and true price coefficient values of individual consumers as dependent variable shows that using more extreme prices as interval bounds and one intermediate price positioned to the right of the interval performs best.     

Price-aware enhanced dynamic recommendation based on deep learning

Price is one of the essential elements influencing consumer purchase behavior. Like consumers’ preferences in products, their price preferences also dynamically change over time. However, dynamic price preferences haven’t been fully considered in existed recommendation studies. In this study, we propose a deep learning-based dynamic recommendation model by considering consumers’ dynamic preferences in both product and price. We specially design a review-and-rating-based sequence generator to select products whose prices the consumers are satisfied with to form the new purchase sequence. We also develop a multi-level attention mechanism in the transformer layer to explore the correlations between consumers’ price choices and to combine the price preferences with the product preferences. Experimental results show the proposed model outperforms the state-of-the-art models on some real-world datasets. Our findings can help retailers understand consumers’ price preferences and make informed decisions related to pricing, discounting, and bundle sales strategies.     

产品伤害危机管理因素对消费者信任修复的影响研究

利用联合分析法,通过情景模拟调研,对产品伤害危机管理中的重要影响因素(如企业社会责任、企业响应策略、媒体效用以及时间)在不同危机严重程度(非常严重、中等程度、轻微程度)下对消费者信任修复造成的影响以及重要程度进行研究,结果表明,时间对于非常严重程度下的消费者信任修复最为重要,响应策略对于中等严重程度下的消费者信任修复最为重要,而企业社会责任对于轻微程度下的消费者信任修复最为重要。     

An empirical assessment of the Consumer Agency Model: Evidence from India and China

Abstract

This research empirically validates the Consumer Agency Model which illustrates consumer reactions to the introduction of new Western products to emerging markets. This study represents the first quantitative effort to test the framework in a comparative field study of consumer attitudes towards a franchised business in the two largest emerging markets globally, China and India. It builds on the original model with McDonald’s as the prototypical representative of the Western franchise industry. The analysis confirms existence of the Consumer Agency Model with remarkable similarity in both countries. Implications for franchise companies as they target the two investigated markets are provided.     

Product Involvement and the Relative Importance of Health Endorsements

Product involvement is a fundamental part of the buyer decision processes, during supermarket visits, as individuals respond differently to stimuli under differing involvement conditions. This study aims to provide a better understanding of the role of nutritional endorsements in consumers’ food purchasing decisions, when evaluated across high and low involvement products. Although past research in this area does exist, a major limitation is that nutritional endorsements have been studied only for their direct effect as a single, isolated product cue on product perception—rather than its importance relative to other product cues, such as price and product branding. This study overcomes this limitation through a conjoint analysis involving a sample of supermarket consumers. The findings suggest that a health endorsement plays a smaller role in influencing consumer decision-making relative to brand or price, but it is stronger for the higher involvement product. These findings provide nutritional foundations and product managers with quantifiable evidence of nutritional programs’ influence in consumer decision-making, justifying the relevance of such endorsements and giving nutritional foundations specific leads for adaptions in their marketing and educational efforts.     

Dynamic assortment in the presence of brand heterogeneity

In this paper, we study the dynamic assortment planning problem in the presence of heterogeneous brands. Over a limited selling season, the retailer sells heterogeneous products from one store brand and one national brand. We use the nested multinomial logit (NMNL) framework to model consumer choice process, in which consumers choose first which brand to buy and then a product within that brand. We formulate this problem using the finite-horizon dynamic programming approach. Using available sales transaction data, we estimate the consumer choice behavior and empirically demonstrate existence of brand heterogeneity. Further, our results suggest that ignoring brand heterogeneity will make the retailer’s expected revenues significantly overestimated, and the potential revenue overestimation depends on initial inventories and prices of products of two brands. We finally show that the retailer will benefit from dynamic assortment optimization with the estimated consumer choice model.     

Building A Sustainable Shelf: The Role of Firm Sustainability Reputation

The reputation of firms for being environmentally friendly and socially responsible is a key purchase driver for sustainable products. However, the commitment of firms to sustainability varies – some firms are founded on strong environmental and social principles; other more traditional firms are built on strong product/brand focus and are not known for sustainability. In response to market trends, many traditional firms are introducing sustainable products to their portfolios. We argue that the firm’s sustainability reputation (FSR) will influence consumer purchase with respect to equally sustainable products from different firms. Two choice studies demonstrate that FSR favors sustainable product choice when the consumer decides between equally sustainable products. However, FSR affects the choice only for sustainable products and not regular products and does so only for consumers that construe sustainability at a high (abstract) level. Retailers should pay attention to the role that FSR plays in consumer response when they select sustainable products to sell.     

Decisions with ChatGPT: Reexamining choice overload in ChatGPT recommendations

This research examines how individuals respond differently to recommendation options generated by ChatGPT, an AI-powered language model, in five studies. In contrast to previous research on choice overload, Studies 1 and 2 demonstrate that people tend to respond positively to a large number of recommendation options (60 options), revealing diverse consumer perceptions of AI-generated recommendations. Studies 3 and 4 further illustrate the moderating effect of recommendation agents and indicate that choice overload elicits distinct patterns of consumer reactions depending on whether the recommendations are from a human or AI agent. Lastly, Study 5 directly measures consumer preferences for recommendation agents, revealing a general preference for ChatGPT, particularly when a large number of options are available. These findings have significant implications for recommendation system design and user preferences regarding AI-powered recommendations.     

Consumer input in standardization: a case study of toy safety

Abstract

Ever since the ‘new approach’ to the achievement of the Internal Market was adopted, the importance of European Standardization has increased. The standardization institutes are now responsible for the technical elaboration of requirements touching upon health and safety of consumers. Therefore, it is of major importance for consumer movements to have an input in the process. In this study, the consumer interest articulation in the ‘new approach’ policy-making process is looked into. The role consumer organizations play in both the pre-standardization and the actual standardization stage are dealt with. Toy safety is taken as a case-study, and the information for the research was mainly gathered from interviews with about 30 representatives of European and national consumer movements, government agencies and industry involved in this field

The study shows that the influence of consumers in the pre-standardization stage, when a directive is drafted and a mandate negotiated between the European Commission and the standardization institutes, is limited

As concerns the standardization stage, consumers have representation in technical committees and working groups of the European standardization institutes. The participation of European and national representatives is compared

The main findings of this research are that consumer input in the actual standardization process is crucial, since their input in the pre-standardization phase is limited. In addition to this, the European and the national consumer representatives are not equally successful in assuring consumer input in this particular policy area. The causes for this difference are considered.