SKIM congress Vienna 2011 - MBC by solutions-2 and TalkTalk

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SKIM conference presentation 2011 about Menu Based Conjoint …

SKIM conference presentation 2011 about Menu Based Conjoint

Nicole Huyghe (solutions-2) and John Irwing (TalkTalk) discuss a recent study where the innovative MBC technique was applied. Subject of the study was the offering of digital tv.

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  • TT is a value phone & broadband provider with about 4 million customers in the UK. A small TV base was acquired when we took over Tiscali in 2009 but to all intents & purposes, TV is a gap in our offering. This is why we joined YouView in 2010.
  • The YouView VentureYouView is a new and exciting digital TV service launching in the UK next year and is a joint venture between some of the UK’s biggest names in TV and broadband, including the BBC, ITV, Channel 4, Channel 5, TalkTalk and BT.   
  • Everything TV should beYouView will bring TV lovers all the Freeview channels they are familiar with, plus ‘High Definition’ (HD) channels from the BBC, Channel 4 and ITV, with 7 day catch-up services from BBC iPlayer, ITV Player and 4oD, all available instantly on your TV.  What’s more, whilst standard TV guides only show you what’s on now or later, the YouView TV guide will also go back in time 7 days. So you can watch programmes that were on yesterday or even last week, whenever you want to watch them.  And with the ability to pause and rewind live TV and record up to two different programmes at once – single episodes or whole series at the touch of a button - it means, you’ll never miss the TV you love. Getting YouViewAll you need to enjoy YouView is one simple set-top box, which you’ll be able to get through one of YouView’s broadband partners, or you can buy it directly from a high street department store and connect it to your existing broadband connection yourself.
  • We initially worked with Solutions2 to understand the relationship between set top box price, ongoing monthly fee, installation charge & contract length amongst our Essential customers. Unsurprisingly this showed us that set top box price & monthly fee had more of an influence on choice than engineer set up charge or contract length. What it also showed was that although most Essentials customers would opt for a lower cost set top box & a higher monthly fee, some customers preferred a higher cost set top box & have a lower monthly fee. That is, to maximise our share we should offer more than one set top box/ monthly fee combination.
  • We then did a second piece of research to:1) Reaffirm Essentials customers willingness to upgrade to TV at 2 price points2) Test Plus & competitor customers willingness to take TV at 2 price points3) Work out impact on uptake if some inclusive content was included in the core offeringThis third point was of particular interest because:Some people within our business believed that customers who had yet to take up a pay tv offering from one of our competitors – Sky or Virgin – would be turned off by a YouView service that came with ‘inclusive’ contentThere was also a school of thought that believed that bundling any content as ‘inclusive’ would reduce demand because for at least some customers they would see it as having a price
  • As well as using this research to look at what impact different types of inclusive content had on set top box choice, we also wanted to use it to look athow we structured & pricedour content packs.Sky & Virgin differentiate themselves from each other through having different content structures. Sky organises its packs by genre, Virgin by size. There was heated debate at TalkTalk over which model to adopt so we complicated things still further for Nicole & Solutions2 by asking her to test the two different content structures.
  • Finally, irrespective of whether our paid for content packs were split by genre or size, we wanted to test each pack at three different prices to get a read of how sensitive our customers were to price.
  • First alternative Traditional choice based conjointAttributes: core package, inclusive content or not, channel bundles at different priceSecond alternativeACBCTo allow respondents to exclude specific channel packages or core packages
  • Problem? show conjoint picture (selfdrawn) wherebundles are combined Unrealistic scenario as this is nothowconsumerswillbuy extra channels
  • Solution ! Pick and chooseapproach  MENU BASED CONJOINT
  • Final research processStep 1Preferencequestionbetweentwo core TV offeringsPreference for inclusive contentEstablishment of core offering via basicquestionsStatedpreference of channel bundles  mainly to familiarise the consumerswith the bundleconcepts and compositionStep 3Menu basedconjoint Split sample(onewithsizebundles, onewith genre bundles)10 tasks4/5 channel bundles5 pricepoints per bundleN=
  • % aantal keren dat een respondent optie 1 zou kiezenBeschrijft het volume van keuzes voor optie 1 over alle respondenten heenEen beetje zoals een volumetricAantal pakketten=het maximum dat ze aangeduid hebben over alle taken heen, dus er moet vermenigvuldigd worden met 5De link volume - %likelihood to buy is not necessarily a % likelihood to buyHow did we choose methodology:We tried all three choose on how we could match the utilties with the counts and which felt intuitive the best
  • Choice of each channel pack = F (desirability, price, price of other packs)Did not choose this as from previous research the results were not very promising (i.e. not better than the exhaustive option). I.e. a very intensive process with a low chance for exceeding the exhaustive route.
  • Ideal here because we did not have many channel packsIntuitively definitely the best, plus not many channels/combinations to estimate
  • Results of the Exhaustive Alternatives modelUtilities for the desirability of each combination showed similar pattern as the count analysisPricesCounts analysis: all channel packs were quite price sensitiveHowever, utilities of the price levels showed less differentiation and constraints were needed to go in the right direction
  • Gepaste model zoeken: de drie modellen afwegen à exhaustive alternatives (zie slides voor “waarom”)Zelf CSV-file opzetten met dummies voor elk van de alternatieven en referentielevelAanpassen van de covariantiematrix voor de dummyvariabelen, met user-specified codingUtilities voor de alternatieven matchten de resultaten van de counts analyseEchter, tamelijk veel constraints nodig om de utilities van de prijslevels in de juiste richting te laten lopen (ondanks het feit dat uit de counts analyse naar voor kwam dat er toch wat prijssensitiviteit was)Dus: Algemene ervaring was positief. De resultaten waren logisch en bruikbaar. In dit geval was de counts analyse eigenlijk al voldoende om alle vragen te beantwoorden.Dummy variables for all 32 combinations
  • Free box/ higher monthly fee still of greater appeal than paid for box/ lower monthly fee ‘Inclusive’ content was not the barrier we thought it might beLittle difference in ‘buy through’ by either approach to structuring paid for contentAppetite for paid for content highest amongst current Pay TV households. Current Pay TV households are also less price sensitive than current Freeview households (irrespective of approach to structuring paid for content)Uptake of additional paid for content is highest amongst those opting for paid for box/ lower monthly fee


  • 1. Optimisation of Digital TV offering through Menu Based Conjoint John Irwin (TalkTalk) / Nicole Huyghe (solutions-2) SKIM conference, 28 Oct 2011
  • 3. Originally just Essentials Expanded to include Plus & competitors „Inclusive‟ content TalkTalk TalkTalk Plusnet BT Sky VirginProduct Unlimited broadband Unlimited L BB + XL Phone + Essentials Plus and calls + Friends & Extra Anytime Anytime Talk Mobile Family MobileSpeed Up to 24MB Up to 24 Mb Up to 20 Mb Up to 20 Mb Up to 20 Mb Up to 10 MbInclusive calls 0870/0845 Free 0870/0845 7p fiat 0870/0845 25% 0870 25% 0870 Inclusive cals rate on calls to discount on calls to 0870/0845 discount on calls calls to Virgin to IT customers Mobiles mobiles to mobiles mobilesMonthly £22.30 £28.30 £35.47 £51.40 £40.25 £41.00Connection fee FREE FREE £0.00 £0.00 £0.00 £667.5018 month total £372.15 £465.90 £643.45 £901.20 %688.5018 month savngs with £177.55 £435.30 £222.60 £201.60TalkTalkHomeSafe networksecurityGenerous downloadallowanceWill never restrict yourspeedUnrestricted streamingFree calls to 3.5+landlinesCalling CircleUK’s best value mobilecallsIntern. calls add-onSpeed DialFibre AvailableOther information Free security for 3 12 months free - - - - months security opt-out
  • 4. Genre vs Size
  • 5. Pricing: Scenarios to test£X1 £ Y1 £ Z1 £ X2 £ Y2 £ Z2 £ X3 £ Y3 £ Z3
  • 6. Business questions Optimum core YouView package? Impact of bundling inclusive content in core package? Bundling by size or genre? Take-up of bundles? Price sensitivity of bundles?
  • 7. The research flow STEP A Core tv packages STEP B Channel composition/take-up 2 TV package offers Channels in core package Channel bundle: size/genre Bundle interest Price sensitivity of bundles
  • 9. Routes of choiceTRADITIONAL CBC ADAPTIVE CBC 2 core packages If no interest in music? Inclusive channels? Channel bundles Different price levels
  • 10. LOW COST set top box Higher Cost set top box higher monthly fee LOW monthly fee £X1 £ Y3
  • 12. RESEARCH PROCESS Sample with size 2 core TV offerings Familiarising bundles Bundle concept Sample with genre Inclusive content and composition bundles CORE STATED MENU BASED OFFERING PREFERENCE CONJOINT
  • 13. Core offering via basic questions CORE choice between 2 core TV offeringsOFFERING preference of free channels
  • 14. Based on the video you have just seen and the description you have justread, which, if either, of the folling packages are you most likely to take ifTalkTalk offered YouView as part of a home phone, broadband & TV service? Set top box - £X1 Essentials package - £X2 per month Installation charge - £X3 Contract length - Y months Set top box - £X4 Essentials package - £X5 per month Installation charge - £X6 Contract length - Y months I would not take either of these packages
  • 15. Assume that the package just selected was offered with [Inclusivecontent] A (at no extra cost), would you still be interested in this pack?All details of the pack are outlined below. Set top box - £X1 Essentials package - £X2 per month Inclusive content – A Installation charge - £X3 Contract length - Y months I would no longer be interested in this package
  • 16. Familiarisation exercise STATEDPREFERENCE Stated preference of channel bundles
  • 17. Please read the discription below for the Kids pack carefully. Please read the description below for the Entertainment pack carefully.Focussing just on the channels that are included in this pack & ignoring the Focusing ojust on the channels that are included in this pack & ignoring thecost for now, please indicate how interested you are in subscribing to this cost for now, please indicate how interested you are in subscribing to thischannel pakc. channel pack. STEP 1: CORE OFFERINGPlease use a scale of 1 to 5 , where 5 means that you are extremely interestedin subscribing to this channel pack and 1 means that you are not at all Please use a scale of 1 to 5, where 5 means that you are extremely interested in subscribing to this channel pack and 1 means that you are not at allinterested in subscribing to it. interested in subscribing to it. STATED PREFERENCE
  • 18. 10 tasks MENU 4/5 channel bundles BASED 5 price points per bundleCONJOINT Split sample(size vs. genre) n=500 per sample
  • 19. On the next ten screens, you will see all of the additional channel packs together with the TalkTalk homephone, broadband & TV packages you have indicated you are moest interested in. The monthly price for eachchannel pack wll vary from screen to screen and we would like you to indicate whether or not you wouldsubscribe to each channel pack at the price you see.If you are not interested in any of the channel packs at anly of the given prices, please tick ‘None of the above’.
  • 20. Below you will see the TalkTalk home broadband & TV package you have indicated you are mostinterested in together with all of the additional channel packs at different monthly prices. For each channelpack, please indicate whether or not you would subscribe to that channel pack at that monthly price.If you are not interested in any of the channel packs at anly of the given prices, please tick ‘None of theabove’. Set top box - £X1 Essential packages - £X2 per month Inclusive content – A Installation charge - £X3 Contract lenght - Y months Entertainment pack £X1 per month Hollywood TV pakc £Y2 per month Knowledge pack £Z3 per month Kids pack £V4 per month Music pack £W4 per month None of the above TOTAL MONTHLY PRICE £Z
  • 23. Predicts “volume” rather than choice Total volume = number of items shown + noneVOLUMETRIC Results in a % likelihood to buyALLOCATION Focus on marginal effects Felt counter-intuitive (total %likelihood >100%)
  • 24. One model for each channel packSERIAL CROSS Models marginal effects <-> EFFECTS combinations
  • 25. Models all possible combinations of channel packs e.g. with 4 channel packs : 24 = 16 combinations e.g. with 5 channel packs : 25 = 32 combinations EXHAUSTIVE Effect of each combination + marginal effectsALTERNATIVES One model More realistic approach of decision-making Estimation time still ok
  • 26. Exhaustive alternatives: results Utilities for the desirability of each combination: similar pattern as the count analysis EXHAUSTIVE Prices – count analysis:ALTERNATIVES All channel packs were quite price sensitive BUT: Utilities of the price levels showed less differentiation and constraints were needed
  • 28. Logical interview process & answers! Simple programmming exercise EXHAUSTIVE Analysis : intensive exerciseALTERNATIVES Which model to use? CSV file Dummy variables Covariance matrix Matching utilities with counts results
  • 29. Actionable findings Low cost set top box & higher monthly fee vs. higher cost set top box & low monthly fee Impact off inclusive content on set top box EXHAUSTIVE choiceALTERNATIVES „Buy through‟ by: • Content model • Pay TV vs Freeview households • Set top box choice
  • 30. Questions?John Irwin john.irwin@talktalkplc.comNicole Huyghe