measuring preferences is central to market...
TRANSCRIPT
![Page 1: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/1.jpg)
Measuring preferences is central tomarket research:
• Do consumers prefer glass bottles or plastic bottles? • Would consumers pay 35 cents more for a plastic bottle? • What is "more important" in yogurt: taste or texture? • What proportion of consumers would be willing to have the
weight of their laptop increased by 50% in order to double the processing speed?
• How much more would a person be willing to pay for an acrylic aquariums if it were scratch proof ? If it were algae resistant? If it were 25% lighter? 40% stronger? If it had curved corners?
• Would the customer's value of this feature justify the cost of producing it?
![Page 2: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/2.jpg)
Consumer research
Examples from your experience?
![Page 3: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/3.jpg)
Many different methods for measuringvalues/preferences.
• choice
• graded choice
• ranking
• matching
• pricing
• rating
• purchase likelihood
![Page 4: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/4.jpg)
Choice
Brand: Sunbeam
Price: $75
Speed: 4 minutes
Self cleaning: Yes
Auto shut off: No
Brand: Toastmaster
Price: $95
Speed: 4 minutes
Self cleaning: No
Auto shut off: Yes
![Page 5: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/5.jpg)
Graded ChoiceClick on a square to tell us how much you like one camera compared to the other.
PermanentCan be changedStyling Covers
1 Step2 StepPicture Taking
Option BOption APicture Quality
$25.00$35.00Price
Camera BCamera AFeatures
I like A completely completely
I like B
more than B more than A
![Page 6: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/6.jpg)
Ranking
![Page 7: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/7.jpg)
Matching
Square feet Cost
Condo X: 500 $350,000Condo Y: 1100 $_______
![Page 8: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/8.jpg)
Likelihood of Purchase
From what you now know about the Acura, what is the probability that you would purchase it within the next 3 years?
100% (Certain)
80% (Almost Sure)
60% (Good Chance)
40% (Fair Chance) 20% (Slight Chance) 0% (No Chance)
![Page 9: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/9.jpg)
Pricing
(1) What is the most you would be willing to pay to save the Hawaiian subspecies of humpback whales from extinction?
$
(2) What is the most you would be willing to pay to save the Hawaiian subspecies of monk seals from extinction?
$
![Page 10: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/10.jpg)
Pricing
1. What is the most you would be willing to pay for 12rolls of Charmin toilet paper?
$
2. What is the most you would be willing to pay for 4rolls of Charmin toilet paper?
$
![Page 11: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/11.jpg)
Which is the "best" method?
Criteria of goodness
• efficiency
• ease of responding
• depth of engagement
• absence of "demand effects"
• ecological validity
• internal coherence
• sensitive to relevant factors
• insensitive to irrelevant factors
![Page 12: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/12.jpg)
Conjoint Analysis
• products can be broken down into attributes
• marketers want to know relative importances
• difficult to express utility functions directly
• easier to choose between products or rate them
• attribute weights can be inferred from choices,
• these inferred attribute weights can then be used to assign utilities to various products and to predict consumer preferences (& to segment markets)
![Page 13: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/13.jpg)
Tradeoff Matrix
Years ofWarrantee
one two three
$11,000
$12,000
$13,000
a b
d
c
e f
g h i
Price
![Page 14: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/14.jpg)
Tradeoff Matrix
Years ofWarrantee
one two three
$11,000
$12,000
$13,000
16
9
st
3rd
2nd
4th
7th 5th
8th
th
th
Price
![Page 15: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/15.jpg)
Tradeoff Matrix
MPG
20 25 30
8 sec
7 sec
6 sec
Acceleration(0 to 60)
![Page 16: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/16.jpg)
Tradeoff Matrix
MPG
302520
8 sec
7 sec
6 sec 123
4
8
56
9 7
Acceleration(0 to 60)
![Page 17: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/17.jpg)
![Page 18: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/18.jpg)
Conjoint Analysis:conceptual & operational problems
• Sometimes difficult to decompose products into more elementary attributes
• The task is not "ecologically valid" • The attribute combinations are not believeable • Task is tedious and boring • People don’t understand what the attributes or attribute
levels refer to (e.g.,"Total Harmonic Distortion" = "5"?) • results are sensitive to how many attributes are used, how
many levels are used, whether rating or ranking tasks are used, and a whole bunch of other things
• self explicated importance ratings can be ambiguous for continuous variables
![Page 19: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/19.jpg)
Which is the more important attribute?
Domain: Attribute A
Baseball Players
Linebackers
Laptops
Automobile Tires
Home Runs
Speed
Speed
Price
Attribute B
Batting Average
Intelligence
Weight
Tread Life
![Page 20: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/20.jpg)
Which is more important?:Price or Tread Life?
Price Tire X: $130 Tire Y: $ 44
Price Tire A: $130 Tire B: $126
Tread Life22,000 miles21,400 miles
Tread Life22,000 miles3,100 miles
![Page 21: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/21.jpg)
calculating expected value &expected value of perfect information (EVPI)
Decision
Introduce flop
0.6
0.4
hit + $4 M
+ $1 M
+ $4 M
- $2.5 M
Do not introduce
0.6 hit
Decision
Introduce flop
0.4
Do not introduce
![Page 22: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/22.jpg)
A more complicated example
Decision
Introduce "X"
Introduce "Y"
"X" fails
"Y" succeeds
"Y" fails
0.7
0.3
0.1
0.9
Neither 0 M
"X" succeeds + $8 M
- $12 M
+ $46 M
- $4 M
![Page 23: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/23.jpg)
Decision
0.9
0.1
0.3
0.7
"Y" fails
"Y" succeeds
"X" fails
Introduce "X"
Introduce "Y"
"X" succeeds + $8 M
- $12 M
+ $46 M
- $4 M
.7 * $8 =(5.6) + .3 *.1 * $46 =(1.38) + .3 * .9 * -$4 =(-1.08) = 5.9
5.9 (with research) – 2 (without research) = 3.9
![Page 24: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/24.jpg)
Marketing trivia
• % of males who put their pants on left leg first ______
• % of females who put their pants on left leg first ______
• % chance that if you send a husband and wife to the store to buy beer,
they will return with different brands? ______ %
• % of people who agree with the statement: "Frozen pizza will never
taste good, and there is nothing that technology can do about it" _____
• % of consumers who prefer their toilet paper to unwind from under the
spool, rather than above it. _______
• % of people using a toothbrush that is more than 6 months old ____
• % of people who don't wet their toothbrush before brushing ____
![Page 25: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/25.jpg)
Marketing trivia
• % of people who believe that money can buy happiness? _____
• % who spend more time thinking about money than sex ______
• % of people who re-use tinfoil ______
• % of people who re-use wrapping paper ______
• % who re-use tea bags ______
• % who meld the last sliver of soap into the new bar ______
• % who would live for a year on a deserted island for $1 mil _____
• % who would murder for $10,000,000 ______
• % of pet owners who buy Christmas presents for their pet ______
![Page 26: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/26.jpg)
Which one is "Takiti" and which one is "Maluma"
![Page 27: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/27.jpg)
Self explicated importance
If two new cars you were considering except for the SINGLE DIFFERENCE shown below, how important would THAT DIFFERENCE be?
A: Made in USA
B: Made in Japan
4 = Extremely (I could not accept B, even if perfect in every other way)
3 = Very (B would have to be outstanding in other ways)
2 = Somewhat (But I would not base my decision on this)
1 = Not important at all
![Page 28: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/28.jpg)
4 Attributes: Acceleration, MPG, Price, Warrantee
How many attribute pairs?
4(2) = 4! ÷ [(4-2)!] (2!)
4*3*2*1 4(2) =
(2*1) (2*1)
52(5) = 52! ÷ [(52-5)!] (5!)
52*51*50*49*48*47*………*1 52(5) =
(47*………*1) (5*4*3*2*1)
![Page 29: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/29.jpg)
The sure-thing principle
pass exam
fail exam
go to Hawaii
stay home
go to Hawaii
stay home
![Page 30: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/30.jpg)
Consumer Needs
Product
Price
Place
Promotion
Economy
Law
Competition
Culture
Technology
![Page 31: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/31.jpg)
$_______
Focus on two procedures:Choice & Matching
Choice Matching
Square feet Cost
Condo X: 500 $350,000 Condo Y: 1100 $440,000
Square feet Cost
Condo X: 500 $350,000 Condo Y: 1100 410,000
![Page 32: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/32.jpg)
Criteria of goodness Choice Matching
• efficiency
• ease of responding
• depth of engagement
• neutrality
• ecological validity
• sensitivity to relevant factors
X
X
X
X
X
? ?
![Page 33: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/33.jpg)
Lab Studies
Group 1"A" = RC Cola
"B" = Coke
"C" = Shaw's
6 5.6
5 5.4
5.24
5 3
4.8 2
4.6
1 4.4
0 4.2
Group 2"a" = Coke
"b" = Coke
"c" = Coke
![Page 34: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/34.jpg)
Lecture Overview
• Discuss different types of market research
• Discuss "Conjoint" Analysis
• Video on Advertising Jello
• Expected Value of Perfect Information
• Marketing Trivia Game ($$$)
![Page 35: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/35.jpg)
Directly reporting indifference curves
# of doughnuts
# of dollars
![Page 36: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/36.jpg)
Years ofWarrantee
Years ofWarrantee
one two three
$11,000
$12,000
$13,000
1st
3rd
2nd
4th
7th 5th
8th
9th
6th
one two three
$11,000
$12,000
$13,000
8
6
7
5
2 4
1
0
3 6
4
2
1.33 4.67 6
![Page 37: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/37.jpg)
Rating potential dates
Overall
Looks Personality British Accent Desirability
C 5 9 NO 60
F 9 5 YES 55
![Page 38: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/38.jpg)
Conjoint Analysis
Overall
Looks Personality British Accent Desirability
A 9 9 NO 80
B 9 5 NO 40
C 5 9 NO 60
D 5 5 NO 20
E 9 9 YES 95
F 9 5 YES 55
G 5 9 YES 75
H 5 5 YES 35
![Page 39: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/39.jpg)
Who is better? Pat or Chris
Looks Personality British Accent
Pat 5 8 NO
Chris 9 4 YES
Desirability = -55 + 5(looks) + 10(personality) + 15(British accent)
![Page 40: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/40.jpg)
Types of Market Research
Market
Research
Primary Research
Secondary Research
Internal
External
experimental
non experimental
Conjoint
Field Studies
Surveys
Focus Groups
Observation
![Page 41: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/41.jpg)
Shutter Camera X: Manual Camera Y: Automatic
Price Camera X: $130 Camera Y: $105
DurabilityWaterproof_________
DurabilityWaterproof_________
![Page 42: Measuring preferences is central to market researchdspace.mit.edu/bitstream/handle/1721.1/104055/15-812...Measuring preferences is central to market research: • Do consumers prefer](https://reader034.vdocuments.mx/reader034/viewer/2022042107/5e864645de4ead2ddd13893a/html5/thumbnails/42.jpg)
Which is more important?:scratch resistance or algae resistance?
Which aquarium would you prefer?
A B Scratch proof Not Scratch Proof
Not algae resistant algae resistant
Strongly 1 ….2….3….4….5….6….7 Strongly
Prefer A Prefer B