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.

1. expect great answers
Taking choice modeling to the next level
May 2013

2. Eline van der Gaast
@Eline_Frederiek
Joris Huisman
@JorisHuisman
SKIM
@SKIMgroup
2

3. 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
4

5. 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
6
Menu-Based Conjoint
Multi-stakeholder Choice Modeling
Integrating emotional drivers of choice

7. Freedom of Choice
7

8. The shopping experience is an ever evolving
environment….
8

9. …. leading to increased freedom of choice for the
consumer
9
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?
10

11. The answer is Menu-Based Conjoint (MBC)
11
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.

12. It’s the difference between…
12
$$ $ $+
Option 1 $
Option 2 $$
Option 3 $-
Option 4 $
Option 5 $+
Option 6 $$$Total price = $
OR
AND
VS.

13. What does it give us?
13
$$ $ $+
Option 1 $
Option 2 $$
Option 3 $-
Option 4 $
Option 5 $+
Option 6 $$$Total price = $
Optimal pricing per car
Uptake and optimal
pricing per feature
VS.

14. MBC - Car options
14

15. 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
15

16. 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
16

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
17

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
Air conditioning $ 90
Audio system $ 75
Heating seats $ 165 Navigation Pack
$ 375
Total price $10,000
18

19. 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

20. 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

21. 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
21

22. $450 $500$400
MBC - Car options - So what?
%DriverComfort
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%
22

23. Menu-Based Conjoint enables you to optimize
customizable products and portfolio
23
Car options is just one example…

24. Multi layered and interactive choice behavior
24

25. The physician-patient relationship has changed
25
Patients have more information and ask more questions

26. ?
How do you determine which message will have the greatest impact on the dialogue?
Optimized messaging strategy = More prescriptions, more compliance
26 FOCI 2013 |

27. How do we account for complex interactions
between different stakeholders in the
decision making process?
27

28. A fictitious business case:
A prescription painkiller
28
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

29. Patients differ from each other
29
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!

30. Physicians differ too
30
Dr. Medcalf Dr. HutchinsonDr. Alban
Because I
say so!
How does it
make you feel?
The data speaks
for itself…

31. What happens if they meet
in the doctor’s office?
31
Mrs. A
Mr. Z
Ms. J
Dr. Medcalf Dr. HutchinsonDr. Alban

32. 32
23%
35%
13%
50%51%
45%
41%
33%
Message 1 Message 2 Message 3 Message 4
Share of choice of painkiller (%)
Patients Doctors
WINNING MESSAGE
%Shareofchoice

33. 33
23%
35%
13%
50%51%
45%
41%
33%34%
40%
29%
42%
Message 1 Message 2 Message 3 Message 4
Share of choice of painkiller (%)
Patients Doctors Adjusted
WINNING MESSAGE
%Shareofchoice

34. Using a bridging variable we weigh the response of the
physicians to account for the behavior of the patient
34
Simulate
physician
preferences
with no patient
request
Simulate
patient
preferences
with physician
recommendation
Recalculate
physician
preferences
with the patient
preferences
Output:
simulator
of market share and
sales revenue for
each message tested
Decision Influence Modeling Process

35. And again there are many other situations where we
need to model complex interactions...
35

36. Mimic reality
36

37. 37
Mood
Temperament
Disposition    Behavior
Motivation
Emotional
Rational Behavior  

38. 38
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

39. 39
A virtual shelf puts a
consumer in a realistic context
of his purchase decision

40. 40
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

41. 41
… and with eye tracking
technology we can even make
this assessment more intuitive

42. 42
Can we include more of the iceberg in
our choice models?

43. 43

44. How can these innovations make your life easier?
44

45. How will these innovations make you life easier?
45
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

46. Visit our booth for a fresh ‘stroopwafel’!
Eline van der Gaast | New Venture Director
E.Vandergaast@skimgroup.com
@Eline_Frederiek
elinevandergaast
Joris Huisman | New Venture Director
J.Huisman@skimgroup.com
@JorisHuisman
jorishuisman