What is Choice Modeling?

The Upfront Analytics TeamEducationLeave a Comment

Cute character businessman standing alone at intersection, being confused and making decision to choose right way to go.

Choice Modeling 101: A Primer

We make choices almost every moment of our lives. Whether you’re choosing between creamer or milk in your coffee, whether to take the bus or walk to work, and whether to watch the news or catch up on your favorite reality show, you make choices both consciously and unconsciously. It may seem like those choices simply define the minutiae of your day, when in fact, your choices have a bigger impact than you think.

A number of factors go into make a choice. More often than not, your brain automatically weighs the options and chooses based on things like habit, life experience, perceived value, and convenience. And, since everyone has a different perception of habits, life experience, value, and convenience, predicting choices can be difficult.

Enter choice modeling: It’s a method by which certain conditions can be reproduced to more effectively predict a person’s choice when confronted with several options. Choice modeling is about much more than trying to find out which product fares the best against a sea of competitors; it’s a market research tool that gives better insight into customer behavior patterns, as well as the trade-off between cost and value.

Why Choice Modeling?

Choice modeling can effectively predict the most likely choice a certain demographic would make, but it’s more than just either/or. Armed with data from choice modeling, it may be easier to determine what price a consumer would pay for a certain item, service, or improvement. For instance, are 50-something males more interested in price or nutrition in breakfast cereal? Would they pay more for a healthier alternative? The resulting data can help predict demand, set prices, and test market waters.

Choice modeling helps organizations focus less on the strategic motives that consumers should use to make decisions and more on the intrinsic motivators they use in actuality. That data is then applied to identify consumptive patterns to better predict how a real consumer would act in a real-life situation (the difference between say, a focus group and an actual purchasing decision in a supermarket).

The Choice for Choice Modeling

Not all choice modeling is created equally. Unless a survey can actively simulate a true purchasing decision, it’s all hypothetical. Take our Slice of Life game, for instance: Because users actually handle a type of currency and trade that currency for certain items within the game, it can be used to better simulate the decision-making process when faced with a real-life choice between two products or price points. Preferences are more readily visible and therefore, data becomes even more valuable. (Not everything can be gamified successfully – read about the pros and cons of gamification here).

Choice modeling predicts actual economic decisions that can help you better plan your next move. With the right data, all of those tiny daily decision could add up to something big. So, the next time you choose between coffee or tea, you might want to think about what that choice says about you as a consumer.

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