So… is it the blue packaging and the $50 rebate that drove your recent uptick in sales? Or was it your brand
name coupled with a set of features that your clients have been asking
your team to add for years? Nine times out of ten a company can’t
answer the basic question “what about my solution is truly driving
sales?” Look, most of you don’t think of marketing as science… but
the best marketing is indeed just that! Most organizations have no real
scientific method for understanding what features, functions, pricing,
packaging and services associated with their offerings will yield the
most revenue and/or the most market share. But believe it or not
there is a scientific method for determining what levers to pull on
your offer to make the most attractive offer in a given market. Its
called a Choice Model.
A Choice Model answers the core questions about what customers value most — what will they pay for versus what they say they will pay for.
Its a quantitative technique to understand in detail the revenue,
demand and market share implications of modifying the different levers
around your offer — pricing, packaging, store placement, target
customers, competitor activity, media, messages, geographic areas, the
brand, product usability, services add-ons etc. and any combination of
So how does it work? A customer or potential customer is
given a “choice card” which contains the values of the key levers…
for the sake of argument, lets look at a consumer brand, say we want
to look at pricing, packaging, and brand of Kiehls face cream for women, with the intent to see how we can increase sales and by how much.
respondent would look at two cards that had the price, the package type
and the brand (Kiehls v. Competitor) and you’d ask them based on the
values of the price, the package type and whether it was Kiehls or not,
which product would they would buy. You would then begin to alter the
values, say decrease the price of one of the products (Kielhls or its
competitor) by 20 cents and see if that would affect purchase
decision. Or you would remove the brand, and just do a side by side
comparison of pricing and packaging to see which one is preferred… by
adding brand back in to the mix then you can quantify the effect your
brand has on purchase intent.
How about a B2B Brand? It works here too. Lets look at ARAG,
a provider of legal benefit services. One can construct a choice model
around the various legal services that are provided, and put them side
by side with a competitors. By modifying the values of these services,
changing them up in a systematic fashion, you can build a model of how
to change the services portfolio, pricing, delivery mechanism, etc. to
alter demand and ultimately consumption of ARAG legal benefit services.
can even extend this to the customer experience itself. For example,
if a brand has outlined a customer experience plan, or you have a
current experience in place, you can choice model which of the planned
enhancements or elements of the current experience have the most impact
on customers… many times you will find that what you think will
impact the experience doesn’t align with what will motivate a customer
to buy based on that experience.
Depending on the
circumstances, this may be done through either structured in-market
experimentation or historical analysis, or a mix of the two. There’s a
whole host of quantitative techniques… conjoint, orthogonal, discrete
modeling that can be used to get at the answers you are looking for.
In retail for instance, you’d want to use a discrete choice model (like
I described above.) What’s also cool about a Choice Analysis is that
you can run “war games” against your competition and figure out which
positioning, which product enhancements, what pricing will be most
advantageous to your brand and most damaging to your competitors’.
from a choice analysis can be dramatic. At clients that I’ve worked
with we discovered that by making slight modifications to their offer
they’ve dramatically altered their market stance in given markets. Its
amazing what happens when you actually involve your customers in your
(Cross-posted @ AbleBrains)