The marketing simulator document provides an overview of how to build a market simulator model to forecast market shares and profits for new product options. It describes the key components of the model including defining the profile space, competitors, customers and choice rules. The document also explains how to compute utilities, predict choice, and aggregate choices to forecast market shares and profits under different scenarios.
Learn all about conjoint analysis in this guide by Survey Analytics. While we focus on choice-based conjoint because it is the most common, you can also learn about what it can be used for and how to conduct it in your research.
Learn all about conjoint analysis in this guide by Survey Analytics. While we focus on choice-based conjoint because it is the most common, you can also learn about what it can be used for and how to conduct it in your research.
How to Run Discrete Choice Conjoint AnalysisQuestionPro
Slide Agenda:
1- What is discrete choice conjoint analysis?
2- The theory and logic behind discrete choice conjoint analysis
3-When to use discrete choice conjoint in your research
4-Specific examples of how to use discrete choice conjoint
5-How to design a discrete choice conjoint project
6- How to write a discrete choice conjoint questionnaire
7-How to analyze the results of a discrete choice conjoint project
8- Tips and Best Practices & Contact information
It is on Conjoint Analysis presented by Radhika Gupta, Shivi Agarwal, Neha Arya, Neha Kasturia, Mudita Maheshwari, Dhruval Dholakia, Chinmay Jaggan Anmol Sahani and Madhusudan Partani of FMG-18A, FORE School of Management
Factor Analysis is a statistical tool that measures the impact of a few un-observed variables called factors on a large number of observed variables. It is often used to determine a linear relationship between variables before subjecting them to further analysis.
Three case studies deploying cluster analysisGreg Makowski
Three case studies are discussed, that include cluster analysis as a component.
1) Customer description for a credit card attrition model, to describe how to talk to customers.
2) Hotel price optimization. Use clusters to find subsets of similar behavior, and optimize prices within each cluster. Use a neural net as the objective function.
3) Retail supply chain, planning replenishment using 52 week demand curves using thousands of seasonal "profiles" or clusters.
Overview of the Recommender system or recommendation system. RFM Concepts in brief. Collaborative Filtering in Item and User based. Content-based Recommendation also described.Product Association Recommender System. Stereotype Recommendation described with advantage and limitations.Customer Lifetime. Recommender System Analysis and Solving Cycle.
This covers the following
WHAT IS CONJOINT ANALYSIS?
WHAT DOES IT DO AND WHAT IT IS USED FOR?
SITUATION WHERE CONJOINT ANALYSIS IS APPLICABLE?
KEY CONJOINT ANALYSIS TERMS
TYPES OF CONJOINT ANALYSIS
APPLICATION OF CONJOINT ANALYSIS IN MARKETING
STEPS IN CONJOINT ANALYSIS
45min talk given at LondonR March 2014 Meetup.
The presentation describes how one might go about an insights-driven data science project using the R language and packages, using an open source dataset.
Regression Analysis and model comparison on the Boston Housing DataShivaram Prakash
Creation of regression models to predict the median housing price using the Boston Housing dataset. Models used: Generalized linear model, generalized additive model, artificial neural networks, regression tree
How to Run Discrete Choice Conjoint AnalysisQuestionPro
Slide Agenda:
1- What is discrete choice conjoint analysis?
2- The theory and logic behind discrete choice conjoint analysis
3-When to use discrete choice conjoint in your research
4-Specific examples of how to use discrete choice conjoint
5-How to design a discrete choice conjoint project
6- How to write a discrete choice conjoint questionnaire
7-How to analyze the results of a discrete choice conjoint project
8- Tips and Best Practices & Contact information
It is on Conjoint Analysis presented by Radhika Gupta, Shivi Agarwal, Neha Arya, Neha Kasturia, Mudita Maheshwari, Dhruval Dholakia, Chinmay Jaggan Anmol Sahani and Madhusudan Partani of FMG-18A, FORE School of Management
Factor Analysis is a statistical tool that measures the impact of a few un-observed variables called factors on a large number of observed variables. It is often used to determine a linear relationship between variables before subjecting them to further analysis.
Three case studies deploying cluster analysisGreg Makowski
Three case studies are discussed, that include cluster analysis as a component.
1) Customer description for a credit card attrition model, to describe how to talk to customers.
2) Hotel price optimization. Use clusters to find subsets of similar behavior, and optimize prices within each cluster. Use a neural net as the objective function.
3) Retail supply chain, planning replenishment using 52 week demand curves using thousands of seasonal "profiles" or clusters.
Overview of the Recommender system or recommendation system. RFM Concepts in brief. Collaborative Filtering in Item and User based. Content-based Recommendation also described.Product Association Recommender System. Stereotype Recommendation described with advantage and limitations.Customer Lifetime. Recommender System Analysis and Solving Cycle.
This covers the following
WHAT IS CONJOINT ANALYSIS?
WHAT DOES IT DO AND WHAT IT IS USED FOR?
SITUATION WHERE CONJOINT ANALYSIS IS APPLICABLE?
KEY CONJOINT ANALYSIS TERMS
TYPES OF CONJOINT ANALYSIS
APPLICATION OF CONJOINT ANALYSIS IN MARKETING
STEPS IN CONJOINT ANALYSIS
45min talk given at LondonR March 2014 Meetup.
The presentation describes how one might go about an insights-driven data science project using the R language and packages, using an open source dataset.
Regression Analysis and model comparison on the Boston Housing DataShivaram Prakash
Creation of regression models to predict the median housing price using the Boston Housing dataset. Models used: Generalized linear model, generalized additive model, artificial neural networks, regression tree
The Customer Experience and Value Creation Chapter 4 O.docxtodd241
The Customer Experience
and Value Creation
Chapter 4 Objectives
Life-cycle Cost and customer value creation
Performance and customer value
Measuring perceived value
MBM6
Chapter 4
1
Life-Cycle Cost and Customer Value Creation
In this section we will look at different ways companies can assess the dollar value they create in customer savings relative to competitors.
MBM6
Chapter 4
The Customer Experience
and Value Creation
Southwest Airlines
Total Cost of Purchase
MBM6
Chapter 4
3
Sources of Life-Cycle Cost
MBM6
Chapter 4
4
Life-cycle Cost & Economic Value
MBM6
Chapter 4
Economic Value = Life-cycle cost (competitor)- Life-Cycle Cost (company)
5
AirCap Total Cost per Shipment
MBM6
Chapter 4
6
Communicating Value
MBM6
Chapter 4
7
Lowering Disposal Costs as
A Source of Value Creation
MBM6
Chapter 4
8
Price-Performance and Customer Value Creation
Performance can also include product features and functions that do not save money but enhance usage and create customer value.
MBM6
Chapter 4
The Customer Experience
and Value Creation
9
Performance vs. Price and Customer Value
Customer Value = Product Price – Fair Price
Data Source: “Digital Cameras,” Consumer Reports (April 2010)
MBM6
Chapter 4
10
Customer Value and Value Map
Canon A590
11
Sport Utility Vehicle Value Map
MBM6
Chapter 4
How would you evaluate the Toyota Highlander value based on these results?
(Data Source: “Best and Worst New and Used Cars,” Consumer Reports (2011): 43.)
12
Relative Performance and Customer Value
MBM6
Chapter 3
If the average performance rating of sixty-two printers is 61 according to Consumer Reports, and HP’s performance rating is 73, what is HP’s relative performance rating?
Relative Performance = (73/61)*100= 120.
Product Performance Rating
Average Performance Rating
X 100
Relative Performance =
13
Measuring Perceived Customer Value
Customer perceptions shape assessments of customer value. In many cases, customers consider more than product performance when they assess the overall value of a product.
MBM6
Chapter 4
The Customer Experience
and Value Creation
14
Perceived Customer Value
MBM6
Chapter 4
Perceived Customer Value
= Overall Performance Index (Overall benefits) – Cost of Purchase Index (cost)
= (Perceived Product Performance + Perceived Service Performance + Perceived Brand Reputation) – Cost of Purchase
15
Measuring Perceived Product Performance
MBM6
Chapter 4
1
2
3
Advantage: When the business is significantly better (>1 points) than a competitor, it gets the relative importance points.
Disadvantage: If it is significantly worse (> -1 points), it loses the relative importance points.
No advantage/disadvantage: Between -1 and +1 no points are won or lost.
16
Servic.
These are some of the models in brand loyalty and consumer behaviour. The best part of this subject is that you can actually put a number to your imagination.
Supported Multiple Choice Questions for Unit 3 Economicstutor2u
Maximum mark is 2/4 if the incorrect answer is given
Knock-outs / rejection explanations:
Incorrect options can be knocked out, if relevant economic reasoning is given, for 1 mark each time.
Up to two knock out marks can be awarded for each supported choice question
There must be some valid economics rationale to the answer in order to earn a mark (this is vital)
Good practice
Define key terms in the question / or in the correct answer stem
Application to the specific context is always encouraged
Draw supporting analysis diagrams (fully labelled)
Annotate clearly and fully any diagrams that are provided
Complete tables of data where necessary
Write in proper sentences but bullet them for emphasis
Practice papers to increase the speed and accuracy of your answers. Work systematically through the specification.
Discrete Choice Conjoint that Cuts Through the Clutter
Are you sick of messing around with discrete choice conjoint software that’s too complicated?
Do you want to run conjoint without all kinds of extras you don’t need?
Are you tired of paying too much for conjoint?
Do you want to run your conjoint study without reading a manual?
In this webinar Survey Analytics CEO Andrew Jeavons and VP Esther LaVielle held a discussion of discrete choice conjoint and gave a demonstration of Survey Analytics' straightforward and powerful conjoint tool.
Applied Machine Learning for Ranking Products in an Ecommerce SettingDatabricks
As a leading e-commerce company in fashion in the Netherlands, Wehkamp dedicates itself to provide a better shopping experience for the customers. Using Spark, the data science team is able to develop various machine-learning projects for this purpose based on the large scale data of products and customers. A major topic for the data science team is ranking products. If a visitor enters a search phrase, what are the best products that fit the search phrase and in what order should the products been shown? Ranking products is also important if a visitor enters a product overview page, where hundreds or even thousands of products of a certain article type are displayed.
In this project, Spark is used in the whole pipeline: retrieving and processing the search phrases and their results, making click models, creating feature sets, training and evaluating ranking models, pushing the models to production using ElasticSearch and creating Tableau dashboarding. In this talk, we are going to demonstrate how we use Spark to build up the whole pipeline of ranking products and the challenges we faced along the way.
Augmenting Machine Learning with Databricks Labs AutoML ToolkitDatabricks
<p>Instead of better understanding and optimizing their machine learning models, data scientists spend a majority of their time training and iterating through different models even in cases where there the data is reliable and clean. Important aspects of creating an ML model include (but are not limited to) data preparation, feature engineering, identifying the correct models, training (and continuing to train) and optimizing their models. This process can be (and often is) laborious and time-consuming.</p><p>In this session, we will explore this process and then show how the AutoML toolkit (from Databricks Labs) can significantly simplify and optimize machine learning. We will demonstrate all of this financial loan risk data with code snippets and notebooks that will be free to download.</p>
Channel capabilities, product characteristics, and impacts of mobile channel ...Minha Hwang
Drawing on the notion of channel capability, we develop a theoretical framework for understanding the interactions between mobile and traditional online channels for products with different characteristics. Specifically, we identify two channel capabilities—access and search capabilities—that differentiate mobile and online channels, and two product characteristics that are directly related to the channel capabilities—time criticality and information intensity. Based on this framework, we generate a set of predictions on the differential impacts of mobile channel introduction across different product categories. We test the predictions using a counterfactual analysis based on vector autoregression and a large panel dataset from a leading e-market in Korea that covers a 28-month period and contains all the transactions made through the online and mobile channels before and after the mobile channel introduction. Consistent with our predictions based on the theoretical framework, our results suggest that the performance impact of the mobile channel depends crucially on the two product characteristics and the resulting product-channel fit. We discuss implications for theory and multichannel strategy.
From Online to Mobile - Impact of Consumers' Online Purchase Behaviors on Mob...Minha Hwang
This project aims to identify the behavioral measures such as purchase patterns and search patterns from the exiting online channel to predict consumers' m-commerce adoption. Findings from this study are useful to identify and target consumers who are more likely to adopt m-commerce by using exiting e-commerce transaction/search data.
The digital marketing industry is changing faster than ever and those who don’t adapt with the times are losing market share. Where should marketers be focusing their efforts? What strategies are the experts seeing get the best results? Get up-to-speed with the latest industry insights, trends and predictions for the future in this panel discussion with some leading digital marketing experts.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
5 big bets to drive growth in 2024 without one additional marketing dollar AND how to adapt to the biggest shifting eCommerce trend- AI.
1) Romance Your Customers - Retention
2) ‘Alternative’ Lead Gen - Advocacy
3) The Beautiful Basics - Conversion Rate Optimization
4) Land that Bottom Line - Profitability
5) Roll the Dice - New Business Models
Financial curveballs sent many American families reeling in 2023. Household budgets were squeezed by rising interest rates, surging prices on everyday goods, and a stagnating housing market. Consumers were feeling strapped. That sentiment, however, appears to be waning. The question is, to what extent?
To take the pulse of consumers’ feelings about their financial well-being ahead of a highly anticipated election, ThinkNow conducted a nationally representative quantitative survey. The survey highlights consumers’ hopes and anxieties as we move into 2024. Let's unpack the key findings to gain insights about where we stand.
Come learn how YOU can Animate and Illuminate the World with Generative AI's Explosive Power. Come sit in the driver's seat and learn to harness this great technology.
It's another new era of digital and marketers are faced with making big bets on their digital strategy. If you are looking at modernizing your tech stack to support your digital evolution, there are a few can't miss (often overlooked) areas that should be part of every conversation. We'll cover setting your vision, avoiding siloes, adding a democratized approach to data strategy, localization, creating critical governance requirements and more. Attendees will walk away with actions they can take into initiatives they are running today and consider for the future.
The What, Why & How of 3D and AR in Digital CommercePushON Ltd
Vladimir Mulhem has over 20 years of experience in commercialising cutting edge creative technology across construction, marketing and retail.
Previously the founder and Tech and Innovation Director of Creative Content Works working with the likes of Next, John Lewis and JD Sport, he now helps retailers, brands and agencies solve challenges of applying the emerging technologies 3D, AR, VR and Gen AI to real-world problems.
In this webinar, Vladimir will be covering the following topics:
Applications of 3D and AR in Digital Commerce,
Benefits of 3D and AR,
Tools to create, manage and publish 3D and AR in Digital Commerce.
Digital marketing is the art and science of promoting products or services using digital channels to reach and engage with potential customers. It encompasses a wide range of online tactics and strategies aimed at increasing brand visibility, driving website traffic, generating leads, and ultimately, converting those leads into customers.
https://nidmindia.com/
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
• Harness neuroscience and Tribal Alignment to transform your communication strategies, turning potential clients into fans and those fans into loyal customers.
• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
Is AI-Generated Content the Future of Content Creation?Cut-the-SaaS
Discover the transformative power of AI in content creation with our presentation, "Is AI-Generated Content the Future of Content Creation?" by Puran Parsani, CEO & Editor of Cut-The-SaaS. Learn how AI-generated content is revolutionizing marketing, publishing, education, healthcare, and finance by offering unprecedented efficiency, creativity, and scalability.
Understanding
AI-Generated Content:
AI-generated content includes text, images, videos, and audio produced by AI without direct human involvement. This technology leverages large datasets to create contextually relevant and coherent material, streamlining content production.
Key Benefits:
Content Creation: Rapidly generate high-quality content for blogs, articles, and social media.
Brainstorming: AI simulates conversations to inspire creative ideas.
Research Assistance: Efficiently summarize and research information.
Market Insights:
The content marketing industry is projected to grow to $17.6 billion by 2032, with AI-generated content expected to dominate over 55% of the market.
Case Study: CNET’s AI Content Controversy:
CNET’s use of AI for news articles led to public scrutiny due to factual inaccuracies, highlighting the need for transparency and human oversight.
Benefits Across Industries:
Marketing: Personalize content at scale and optimize engagement with predictive analytics.
Publishing: Automate content creation for faster publication cycles.
Education: Efficiently generate educational materials.
Healthcare: Create accurate content for patients and professionals.
Finance: Produce timely financial content for decision-making.
Challenges and Ethical Considerations:
Transparency: Disclose AI use to maintain trust.
Bias: Address potential AI biases with diverse datasets.
SEO: Ensure AI content meets SEO standards.
Quality: Maintain high standards to prevent misinformation.
Conclusion:
AI-generated content offers significant benefits in efficiency, personalization, and scalability. However, ethical considerations and quality assurance are crucial for responsible use. Explore the future of content creation with us and see how AI is transforming various industries.
Connect with Us:
Follow Cut-The-SaaS on LinkedIn, Instagram, YouTube, Twitter, and Medium. Visit cut-the-saas.com for more insights and resources.
SEO as the Backbone of Digital MarketingFelipe Bazon
In this talk Felipe Bazon will share how him and his team at Hedgehog Digital share our journey of making C-Levels alike, specially CMOS realize that SEO is the backbone of digital marketing by showing how SEO can contribute to brand awareness, reputation and authority and above all how to use SEO to create more robust global marketing strategies.
A.I. (artificial intelligence) platforms are popping up all the time, and many of them can and should be used to help grow your brand, increase your sales and decrease your marketing costs.In this presentation:We will review some of the best AI platforms that are available for you to use.We will interact with some of the platforms in real-time, so attendees can see how they work.We will also look at some current brands that are using AI to help them create marketing messages, saving them time and money in the process. Lastly, we will discuss the pros and cons of using AI in marketing & branding and have a lively conversation that includes comments from the audience.
Key Takeaways:
Attendees will learn about LLM platforms, like ChatGPT, and how they work, with preset examples and real time interactions with the platform. Attendees will learn about other AI platforms that are creating graphic design elements at the push of a button...pre-set examples and real-time interactions.Attendees will discuss the pros & cons of AI in marketing + branding and share their perspectives with one another. Attendees will learn about the cost savings and the time savings associated with using AI, should they choose to.
When most people in the industry talk about online or digital reputation management, what they're really saying is Google search and PPC. And it's usually reactive, left dealing with the aftermath of negative information published somewhere online. That's outdated. It leaves executives, organizations and other high-profile individuals at a high risk of a digital reputation attack that spans channels and tactics. But the tools needed to safeguard against an attack are more cybersecurity-oriented than most marketing and communications professionals can manage. Business leaders Leaders grasp the importance; 83% of executives place reputation in their top five areas of risk, yet only 23% are confident in their ability to address it. To succeed in 2024 and beyond, you need to turn online reputation on its axis and think like an attacker.
Key Takeaways:
- New framework for examining and safeguarding an online reputation
- Tools and techniques to keep you a step ahead
- Practical examples that demonstrate when to act, how to act and how to recover
First Things First: Building and Effective Marketing Strategy
Too many companies (and marketers) jump straight into activation planning without formalizing a marketing strategy. It may seem tedious, but analyzing the mindset of your targeted audiences and identifying the messaging points most likely to resonate with them is time well spent. That process is also a great opportunity for marketers to collaborate with sales leaders and account managers on a galvanized go-to-market approach. I’ll walk you through the methods and tools we use with our clients to ensure campaign success.
Key Takeaways:
-Recognize the critical role of strategy in marketing
-Learn our approach for building an actionable, effective marketing strategy
-Receive templates and guides for developing a marketing strategy
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CROVWO
In today’s era of AI, personalization is more than just a trend—it’s a fundamental strategy that unlocks numerous opportunities.
When done effectively, personalization builds trust, loyalty, and satisfaction among your users—key factors for business success. However, relying solely on AI capabilities isn’t enough. You need to anchor your approach in solid principles, understand your users’ context, and master the art of persuasion.
Join us as Sarjak Patel and Naitry Saggu from 3rd Eye Consulting unveil a transformative framework. This approach seamlessly integrates your unique context, consumer insights, and conversion goals, paving the way for unparalleled success in personalization.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Videos are more engaging, more memorable, and more popular than any other type of content out there. That’s why it’s estimated that 82% of consumer traffic will come from videos by 2025.
And with videos evolving from landscape to portrait and experts promoting shorter clips, one thing remains constant – our brains LOVE videos.
So is there science behind what makes people absolutely irresistible on camera?
The answer: definitely yes.
In this jam-packed session with Stephanie Garcia, you’ll get your hands on a steal-worthy guide that uncovers the art and science to being irresistible on camera. From body language to words that convert, she’ll show you how to captivate on command so that viewers are excited and ready to take action.
4. Market share forecasts
• Market simulators
– What-if scenarios to evaluate marketing strategies
– Select a set of products to represent the market
• Often start with the current market as base case
– Each product is represented by its levels on each
feature
– Use each respondent’s utility function to calculate
his/her utility for each product in the choice scenario
– use a decision rule to predict choice for each consumer
– Aggregate the predicted choice (probability) across
respondents to calculate predicted market shares
Us
Us+them
5. Computation steps
step 1: conjoint analysis
Partworths for attribute levels
step 2: multi-attribute utility model
Utilities for competing products
step 3: choice model
Probabilities of choice
individual level
step 4: straight addition
Market share forecasts
aggregate level
Us
Us+them
6. Building blocks: Profile space
•
Profile space
Brand
Apple
Blackberry
Touch screen
Samsung
•
User
interface
Price
Keyboard
Any price
$99 to $399
Suppose we are Apple, and our product is:
Apple
Touch screen
$249
7. Building blocks: Competitors
•
Who are the important competitors?
–
–
–
•
Customer view: look for substitutes for your product
Perceptual maps helpful
Better to include too many rather than too few: conjoint will deal with lack of actual competition, but it
cannot magically account for an excluded competitor
Simplistic example: 2 competitors
Blackberry
Touch screen
Samsung
Keyboard
$199
$149
8. Building blocks: Market
• Market = your product + competitors’ products
you
Apple
Touch screen
$249
competitor 1
Blackberry
Touch screen
$199
competitor 2
Samsung
Keyboard
$149
9. Building blocks: Customers
•
Customer = partworths (each customer is a row of numbers)
Customer
Brand:
Apple
Brand:
Blackberry
Brand:
Samsung
User
interface:
keyboard
User
interface:
Touch
screen
Price:
Utility
$99 vs.
$399
Alex
20
10
0
0
10
30
Bonnie
10
10
0
0
10
30
Colin
0
10
10
0
20
15
Danielle
0
0
0
20
0
15
Ella
0
20
0
0
0
15
Utility function = sum of product’s partworths
10. Exercise: Would Alex buy your product?
•
Alex: partworths (each customer is a row of numbers)
Customer
Brand:
Blackberry
Brand:
Samsung
User
interface:
keyboard
User
interface:
Touch
screen
Price:
Utility
$99 vs.
$399
Alex
•
Brand:
Apple
20
10
0
0
10
30
Market: choice-sets
Brand
User interface
Price
You
Apple
Touch screen
$249
Competitor 1
Blackberry
Touch screen
$199
Competitor 2
Samsung
Keyboard
$149
Utility
11. Help: Would Alex buy your product?
Customer
Brand:
Blackberry
Brand:
Samsung
User
interface:
keyboard
User
interface:
Touch
screen
Price:
Utility
$99 vs.
$399
Alex
•
Brand:
Apple
20
10
0
0
10
30
Reminder on how to interpret the price partworths
–
–
–
•
For other price points: use interpolation
–
–
•
Partworth for $99 is 30 utils
Partworth for $399 is 0 utils
Partworth Gap = 30 uitls
Partworth for $L is (MaxPrice – L) * (partworth gap)/(MaxPrice – MinPrice)
In this case this interpolation formula becomes: Partworth for $L = (399 – L) * 0.1
Now calculate utility for each product
12. Solution - Utility Calculation for Alex
Brand
Price
You
Apple
Touch screen
$249
Competitor 1
Blackberry
Touch screen
$199
Competitor 2
•
User interface
Samsung
Keyboard
$149
Alex is most likely to buy (
)
– Key idea: utility maximization
(We can predict what each customer will buy)
Utility
13. Exercise #2 – Choice Prediction
Highlight the product
Table 1
Custom
er
Brand
:
Apple
Brand:
Blackber
ry
Brand:
Samsu
ng
User
interfac
e:
keyboar
d
User
interface:
Touch
screen
Price:
Utility $99
vs. $399
Utility
of
your
product
Utility
of
Comp 1
Utility
of
Comp 2
Alex
20
10
0
0
10
30
45
40
25
Bonnie
10
10
0
0
10
30
35
40
25
Colin
0
10
10
0
20
15
27.5
40
22.5
Danielle
0
0
0
20
0
15
7.5
10
32.5
Ella
0
20
0
0
0
15
7.5
30
12.5
you
•
Question: Highlight the product chosen by each customer
in Table 1. Assume that customers choose the product
which gives the maximum utility with the probability of 1
(deterministic choice rule.)
Comp 1
Comp 2
Apple
Black
berry
Sam
sung
Touch
screen
Touch
screen
Keyboa
rd
$249
$199
$149
14. Exercise #3 – Market Share Forecast
Question: Add the number of customers purchasing each product and
compute market shares in Table 2.
Custom
er
Brand
:
Apple
Brand:
Blackber
ry
Brand:
Samsu
ng
User
interfac
e:
keyboar
d
User
interface:
Touch
screen
Price:
Utility $99
vs. $399
Utility
of
your
product
Utility
of
Comp 1
Utility
of
Comp 2
Alex
20
10
0
0
10
30
45
40
25
Bonnie
10
10
0
0
10
30
35
40
25
Colin
0
10
10
0
20
15
27.5
40
22.5
Danielle
0
0
0
20
0
15
7.5
10
32.5
Ella
0
20
0
0
0
15
7.5
30
12.5
Table 2
•
Forecast:
you
Comp 1
Comp 2
Product
# persons
buying
%
share
Apple
Black
berry
Sam
sung
Your product
( )
( )%
Competitor 1
( )
( )%
Touch
screen
Touch
screen
Keyboa
rd
Competitor 2
( )
( )%
$249
$199
$149
15. What was the choice model used here?
Utility
of
your
product
Utility
of
Comp 1
Utility
of
Comp 2
•
How sure are you Colin will buy
Comp 2?
Alex
45
40
25
•
Bonnie
35
40
25
How sure are you Alex will buy
your product?
Colin
27.5
40
22.5
Danielle
7.5
10
32.5
•
Ella
7.5
30
12.5
you
Comp 1
Comp 2
Apple
Black
berry
Sam
sung
Alex gets 0.1 utils per dollar
saved (5 utils / $50). What if
Blackberry (comp 1) discounts
by $50? What will Alex buy?
Touch
screen
Touch
screen
Key
board
$249
$199
$149
16. Choice rules
•
Maximum utility rule (deterministic): predict that an individual will always buy the
option with the highest estimated utility
– Simple to apply
– Puts too much confidence in our utility measurement, not empirically valid
– Unstable: the entire prediction can tip with a miniscule discount
Improvement idea: assign probability of choice instead of 0/1!
•
Logit model (probabilistic): predict that an individual will most likely buy the option
with the highest fitted utility, but there is some uncertainty.
17. Logit Model Rule
• Robust, industry standard
• Theoretically sound: related to maximizing utility, Nobel price (2000) to Daniel
McFadden for developing this model
• c = confidence parameter ~ how confident are you in your utility estimates?
18. Logit Model Rule Example: Alex
•
Suppose we take c = 0.1
Utility (U)
c*U
Exp(c*U)
Choice probability
You
45
4.5
90.02
90.02/[90.02+54.6+1
2.18]=0.57
Competitor 1
40
4
54.60
54.60/[90.02+54.6+1
2.18]=0.35
Competitor 2
25
2.5
12.18
12.18/[90.02+54.6+1
2.18]=0.08
19. The Role of Confidence Parameter
Utility
of
your
product
40
25
35
40
25
Colin
27.5
40
22.5
Danielle
7.5
10
32.5
Ella
•
45
Bonnie
Low confidence (c=0.01)
Utility
of
Comp 2
Alex
•
Utility
of
Comp 1
7.5
30
12.5
Medium confidence (c=0.1)
•
High confidence (c=1)
Custom
er
You
Comp
1
Comp
2
Custom
er
You
Comp
1
Comp
2
Custom
er
You
Comp
1
Comp
2
Alex
36%
34%
30%
Alex
57%
35%
8%
Alex
99%
1%
0%
Bonnie
34%
36%
31%
Bonnie
33%
55%
12%
Bonnie
1%
99%
0%
Colin
32%
37%
31%
Colin
20%
68%
12%
Colin
0%
100%
0%
Danielle
30%
31%
39%
Danielle
7%
9%
84%
Danielle
0%
0%
100%
Ella
30%
38%
32%
Ella
8%
78%
14%
Ella
0%
100%
0%
Share
33%
35%
32%
Share
25%
49%
26%
Share
20%
60%
20%
20. How can we determine c?
• It is possible to use a choice-task as part of your ratings-based conjoint
• In practice, we often use
– c = 100/ [12 * Max of Rating Scale]
• With 100 point rating scales, this gives
– c = 100/1200 = 0.083 (a reasonable value based on dozens of past studies)
21. Logit model choice rule: Summary
• Works for arbitrary number of products:
• Interpretation: exp(c*Uia) ~ attractiveness of product A to person I, and logit
is just ratio of attractiveness to total attractiveness of market offerings
23. Market shares
• Prediction of market share is the average of
the individual level probabilities of choice
ˆ
SA
1
N
i
exp( c U iA )
exp( c U ij )
j
Us
Us+them
24. Profit Forecast
• We need marginal cost function and size of the
market in addition to market share forecast
• 1. Compute predicted market share s(P,p)
• 2. Compute predicted marginal costs c(P)
• 3. Compute predicted profit
= {# of customers x s(P,p)} x {p – C}
Us
Us+them
25. Exercise #4 – Profit Forecast
•
•
A medical equipment manufacturer is looking into a new testing device. It has identified a number
of key product characteristics among which price and accuracy are deemed the most important.
The company issued a conjoint analysis which you carried out. It turned out only two types of
customers exist in this market. Segment 1 is 60% of the market, segment 2 is 40% of the market.
The following table of partworths at the segment level was obtained.
Attribute
Level
Price
Accuracy
$13,000
Segment 1
0
20
Segment 2
•
$15,000
0
15
$11,000 99.9%
99%
95%
accuracy accuracy accuracy
40
55
25
0
30
15
10
0
The total size of the market is 100 units. The competition consists of only one firm. It offers a midpriced (i.e. price = $13,000) testing device that delivers 99% accuracy. Your costs to manufacture
and develop the various levels of accuracy are as follows
Costs
Variable Fixed
99.9% accuracy
11000 200000
99% accuracy
10000 150000
95% accuracy
9500
50000
•
•
If you decide to launch the me-too option the best you will be able to do is to get half of the market
and you can maximally charge the price of your competitor.
Consider two product launch options: (A) 99.9% accuracy at price of $15,000, (B) 95% accuracy at
price of $11,000. Which product would be more profitable for you to launch in this market? Show
your work by calculating expected profit for each option. (Note: Assume that the utility differences
are large enough to use the deterministic maximum utility rule.)