case studies
Choice-based modelling
A leading logistics organisation was considering updating its technology to incorporate new service attributes in an existing product. Forethought was commissioned to gain an understanding of the likely demand for and the premium that customers were willing to pay for these new services, within two key markets.
An initial qualitative phase was undertaken to ascertain the drivers of choice for the proposed new services across the two identified markets. From the qualitative phase, a set of service attributes deemed to be driving customer choice were derived, to which our client’s new services were added. Various product profiles were designed and used in the data collection process, which enabled choice-based modelling to be undertaken.
The analysis revealed important similarities and differences across customer markets, and product attribute importance. The interaction between the price and service attributes of the product, to determine share of preference, was then built into a Conjoint Simulator. This enabled our client to vary the price of the product whilst keeping all other product attributes constant and immediately observe its effect on product preference. Importantly, this simulation was concurrently run across both our client’s market segments allowing for direct comparisons. This simulation provided valuable insight into the impact of price on product choice, across market segments thus facilitating the ‘packaging’ of our client’s product with reference to price and service attributes.
Through Choice-Based Modelling, Forethought was able to answer three crucial questions for our client. How important were the proposed service attributes to customer choice? At which price should we introduce these services attributes? Lastly, how do the answers to these questions vary across different market segments?
