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Taking choice modeling to the next level | SKIM at FOCI 2013 by SKIM on May 16, 2013 Edit 0 views At The 2013 Future of Consumer Intelligence conference, SKIM thought leaders, Eline van der Gaast and Joris Huisman, shared new methods and techniques for expanding the ability to create forward looking models accounting for rational and emotional choice behavior. These models enable marketers and product developers to make strategic and tactical decisions. For more information about this presentation, visit http://www.skimgroup.com/skim-at-foci-2013.
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expect great answers
Taking choice modeling to the next level
May 2013
2
Eline van der Gaast
@Eline_Frederiek
Joris Huisman
@JorisHuisman
SKIM
@SKIMgroup
3 Courtesy of Wordle.net & IMDB.com
4
Why do we experiments?
Experiments enable us to create and control the virtual environment of a moment of truth and observe responses to your new developments and strategies
5
JORIS
Through experiments we can understand and model choice behavior
Basic example of Discrete Choice
Modeling
6
NEW choices require NEW techniques and methodologies
Menu-Based Conjoint
Multi-stakeholder Choice Modeling
Integrating emotional drivers of choice
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Freedom of Choice
8
The shopping experience is an ever evolving environment….
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…. leading to increased freedom of choice for the consumer
You can have any color you want as long as it is black.
Choice from numerous different packages, options
and colors.
10
How can we understand consumer behavior in a highly customizable
environment?
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The answer is Menu-Based Conjoint (MBC)
Option 1 $
Option 2 $$
Option 3 $-
Option 4 $
Option 5 $+
Option 6 $$$
$$ $ $+
Which car would you choose?
Total price = $
Which of the following options would you choose
on top of this car?
VS.
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It’s the difference between…
$$ $ $+
Option 1 $
Option 2 $$
Option 3 $-
Option 4 $
Option 5 $+
Option 6 $$$Total price = $
OR
AND
VS.
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What does it give us?
$$ $ $+
Option 1 $
Option 2 $$
Option 3 $-
Option 4 $
Option 5 $+
Option 6 $$$Total price = $
Optimal pricing per car
Uptake and optimal pricing per feature
VS.
MBC - Car options
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Base price: $10,000
Driver comfort$ 440
Sport package $ 760
Cabin Comfort Plus$ 265
Metallic paint $ 450
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $150
GPS alarm $ 320
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 375
Total price $10,000
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Base price: $10,000
Driver comfort$ 440
Sport package $ 760
Cabin Comfort Plus$ 265
Metallic paint $ 450
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $150
GPS alarm $ 320
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 375
Total price $10,000
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Base price: $10,000
Driver comfort$ 440
Sport package $ 760
Cabin Comfort Plus$ 265
Metallic paint $ 450
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $150
GPS alarm $ 320
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 375
Total price $10,000
17
Base price: $10,000
Driver comfort$ 440
Sport package $ 760
Cabin Comfort Plus$ 265
Metallic paint $ 450
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $150
GPS alarm $ 320
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 375
Total price $10,000
18
Base price: $10,000
Driver comfort$ 440
Sport package $ 760
Cabin Comfort Plus$ 265
Metallic paint $ 450
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $150
GPS alarm $ 320
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Navigation Pack $ 375
Total price $11,355
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165
19
Base price: $10,000
Driver comfort$ 500
Sport package $ 760
Cabin Comfort Plus$ 230
Metallic paint $ 550
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $ 250
GPS alarm $ 420
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 475
Total price $10,000
20
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Base price: $10,000
Driver comfort$ 500
Sport package $ 760
Cabin Comfort Plus$ 230
Metallic paint $ 550
Heated mirrors $ 150
Alloy Wheels $ 350
GPS navigator $ 250
GPS alarm $ 420
MBC - Car options
Comfort Seat $ 90
Parking sensors $ 195
Rain sensor $ 265
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack $ 475
Total price $11,185
$450 $500$400
MBC - Car options - So what?%
Dri
ve
r C
om
fort
Price
Price Sensitivity Take-up rates
Driver comfort
Comfort Seat
Parking sensors
Rain sensor
$ 500
$ 90
$ 195
$ 265
18.5%
7.2%
11.3%
9.9%
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Menu-Based Conjoint enables you to optimize customizable products and portfolio
Car options is just one example…
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Multi layered and interactive choice behavior
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The physician-patient relationship has changed
Patients have more information and ask more questions
FOCI 2013 | www.skimgroup.com
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Best message for physicians
Best message for
patients
Best message for physician
patient dialogue
?
How do you determine which message will have the greatest impact on the dialogue? Optimized messaging strategy = More prescriptions, more compliance
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How do we account for complex interactions between different stakeholders in the
decision making process?
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A fictitious business case: A prescription painkiller
What is the optimal communication strategy?
Objective: measure preference and differentiation for each message; forecast impact on share and revenue
• 4 new positioning statements
• Existing product
• Strong competition
• Significant patient involvement
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Patients differ from each other
Mrs. A
Mr. Z
Ms. J
Sure, doctor, thank you!
Not if I have to pay for it myself!
I read something else on Wikipedia!
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Physicians differ too
Dr. Medcalf Dr. HutchinsonDr. Alban
Because I say so!
How does it make you feel?
The data speaks for itself…
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What happens if they meet in the doctor’s office?
Mrs. A
Mr. Z
Ms. J
Dr. Medcalf Dr. HutchinsonDr. Alban
? ? ?
? ? ?
? ? ?
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Message 1 Message 2 Message 3 Message 4
23%
35%
13%
50%51%45%
41%33%
Share of choice of painkiller (%)
Patients Doctors
WINNING MESSAGE
% S
har
e o
f ch
oic
e
33
Message 1 Message 2 Message 3 Message 4
23%
35%
13%
50%51%45%
41%
33%34%40%
29%
42%
Share of choice of painkiller (%)
Patients Doctors Adjusted
WINNING MESSAGE
% S
har
e o
f ch
oic
e
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Using a bridging variable we weigh the response of the physicians to account for the behavior of the patient
Simulate physician preferenceswith no patient
request
Simulate patient
preferenceswith physician
recommendation
Recalculate physician
preferenceswith the patient
preferences
Output: simulator
of market share and sales revenue for
each message tested
Decision Influence Modeling Process
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And again there are many other situations where we need to model complex interactions...
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Mimic reality
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Mood
Temperament
Disposition Behavior
Motivation
Emotional
Rational Behavior
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Easy access to audiovisual technology enables us to create and control the (virtual) environment of decision making experiment and observe reaction and responses to the stimuli
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A virtual shelf puts a consumer in a realistic context of his purchase decision
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It also allows us to track the respondents virtual considerations….
Even though this respondent bought Snapple, we can see that they are attracted by the Arizona packaging
= Mouse tracking
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… and with eye tracking technology we can even make this assessment more intuitive
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Can we include more of the iceberg in our choice models?
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How can these innovations make your life easier?
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How will these innovations make you life easier?
Menu-Based Conjoint
Multi-stakeholder Choice Modeling
Emotional Drivers of Choice
Improve your pricing strategy of customizable products based on price sensitivity of features
Account for interaction between different stakeholders in your communication strategy
Base your business decision on rational and emotional drivers of choice of your customers
Visit our booth for a fresh ‘stroopwafel’!
Eline van der Gaast | New Venture Director
@Eline_Frederiek
elinevandergaast
Joris Huisman | New Venture Director
@JorisHuisman
jorishuisman
