Analysing Consumer Preferences

& Consumer Perceptions

Suresh MalodiaAssociate Professor SIBM Pune

Analysing Consumer Preferences

Understanding of consumer preferences is particularly important for product policy (eg., what features to have, whether or not to offer a new product) and pricing decisions. There are two proven procedures for the actionable analysis of consumer preferences• Concept testing• Conjoint analysis.

• Concept test A straightforward test: consumers are presented with product idea and directly asked for their reactionHow likely would you be to buy this product.

• Conjoint analysisIt’s a in depth test that not only looks at the reactions to a product idea but also gets insights into the underlying preferences.

Concept Testing• Colgate Palmolive faced the issue of whether or not to introduce a

new toothbrush and how to position it. Consumers reacted to the offering on a five-point “purchase intention” scale, marking one box• 87% consumers rated the concept in one of the top two boxes.

• Similarly, when BIOPURE received FDA approval for a blood substitute for dogs, it conducted a survey in which the product was described to veterinarians who were then asked if they “would try” the product in critical and non critical cases. At a price of $100, 95% reported being willing to try for critical cases and 70% for non-critical cases.

Colgate Precision

Executing a Concept Test• How to communicate the concept

Colgate chose to present a “positioning concept” (i.e., product concept was presented in a persuasive form by showing consumers mock advertisements for the precision toothbrush)Alternative could be to present a core idea only without an accompanying marketing message. “core idea” vs. “positioning concept”

• The data to be collected from respondents• Intended purchase measure• Overall product diagnostics• Respondents profiling variables• Special attribute diagnostics

Data Type # 1: Purchase Measure• Likelihood of purchase• Expected amount.

Indicator of trial

11

Which statement best describes how often you think you would buy this product if it were conveniently available to you

• Once a week or more often• Once every two or three weeks• Once a month• Once every two to three months• Once every four to six months• Less often• Never

Sales volume per potential user in time period =

% of potential users in market who try productx Expected number of purchases in the period for triersxExpected number of units per purchase

Purchase measures from a concept test

typically are designed to measure the three variables on the right-

hand side

Data Type #2: Overall Product Diagnostics• Diagnostic data give insight into why the purchase data turned out the way it did.

• It usually assess the product’s perceived uniqueness (On a 1-5 scale where 1 = very similar and 5 = quite distinct, how would you rate the product relative to ones currently on the market?)

• And believability (i.e., Does the respondent believe the product can do what it claims?)

For example, can the Colgate Precision toothbrush remove 35% more plaque?

• Since a high-uniqueness, high believability concept could still generate low purchase interest, firms usually assess how salient the product is to solving a consumer’s problem and its overall interest to the consumer.

Data Type #3: Specific Attribute Diagnostics

Perception: How do you perceive the service on each of the following dimenions?Excellent Poor

Entertainment ValueEducational ValueEase of Site Navigation

Attribute Importance: How important is the attribute to you?Very Important

Not at all Important

Entertainment ValueEducational ValueEase of Site Navigation

• One method is the use of open-ended questions such as “you said that you_____. What is it specifically about the product that makes you feel this way?”

• Second approach is to collect data on perceptions of specific attributes and their importance to the consumer. For ex, we might ask respondents exposed to a new Internet Service concept for data on perception and importance scales as follow:

Data Type #4: Respondents Profiling Variables

• The type of consumers who respond in different ways.oDemographicsoCurrent purchase behaviouroPerception of the categoryo Satisfaction with current brands usedo Influence in actual purchase decision

Interpreting the Purchase Intent Data• Between 80% - 90% (Taylor, Houlahan & Gabriel, 1975)• Definitely will buy 19%, Probably will buy 64% (D Schwartz, 1987)

Conjoint Analysis

• Conjoint analysis is a statistical technique used in market research to determine how people value different attributes (feature, function, benefits) that make up an individual product or service.

• The trick is, via construction of the value system, we bootstrap ourselves up from asking about preferences on a small subset of products being able to make predictions about relative preference for any products with these attributes.

Ui = Ui1 + Ui2 + . . . . . . . . . . . . . + Uin

Understanding Consumer Perceptions

• How consumers “see” the firm, brand, or product relative to competitor.• To check whether or not the desired positioning has been achieved or

not in the mind of the consumer.• Collect perceptual data

Perceptual Mapping

• “Perceptual maps measure the way products are positioned in the minds of consumers and show these perceptions on a graph whose axes are formed by product attributes.” (Kardes, Cronley, & Cline, 2011).• “A perceptual map represents customer perceptions and preferences

spatially by means of a visual display” (Ferrell & Hartline, 2008).

Applications of Perceptual Maps in NPD

• Understanding market structure

• Perceptions of a product concept

• Directions to R&D efforts to satisfy customer better

Thank you