A Hybrid Choice Model for Benefit-Based Decisions: New Insights For Positioning
In this paper we develop a benefit-based choice model that estimates the map between attributes and benefits as well as benefits and choices using discrete choice experiments. It helps to understand how attributes influence perceived benefits and how these perceptions in turn lead to choices thus leading to improved insights and more accurate predictions. Our model is based on an integrated choice latent variable (ICLV) model that only needs the respondent to answer one additional question per choice set and latent perceived benefit, and which in turn provides the researcher with information about the perceived benefits of any attribute level combination. By allowing for consumer heterogeneity in the perception of benefits as well as in the impact of these perceptions on overall choice, the model provides a deeper understanding of the trade-offs different consumer segments make when choosing a product. An empirical illustration of bread choices demonstrates how the model can help managers better understand positioning via a trade-off based account of perceived benefits, to what degree perceived benefits impact choices, and how such effects are heterogeneous across consumers.
More detailed information about Professor Eckert is also available at https://www.uts.edu.au/staff/christine.eckert.