What is MaxDiff and When Should We Use It for Market Research?

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MaxDiff 101: What it Is and How it Applies to Market Research

Professor Jordan Louviere of the University of Alberta was the first to name the model of discrete choice between three or more items as “MaxDiff” in 1987. Today, the model is applied to everything from vacation destinations to soda brands as a way to better predict the features for which consumers would be willing to pay top dollar. Understanding MaxDiff can make for more effective market research results, and the ability to invest in the features that will have the most impact for consumers. Get to know MaxDiff a little better to see why it’s superior to less in-depth methods.

Getting to Know MaxDiff

At its core, MaxDiff is a mathematical theory that better examines the way consumers decide between three or more objects. The theory assumes that consumers compare each item in the set against one another to come up with a natural hierarchy of best to worst. If there are three brands of shampoo up for consideration, for example, consumers can say which is best and which is worst based upon their experience and opinions; of course, that means the consumer is not only comparing the best against the worst, but each item in the set against one another. If Brand A is best and Brand C is the worst, the consumer must have also decided that Brand A was better than Brand B but Brand C was worse than Brand B.

Why does MaxDiff matter? Rather than giving the broad or skewed results common to typical consumer surveys, forcing respondents to choose between brands or features gives a clearer picture of which are the most significant.

MaxDiff in Practice

Imagine that you’re trying to develop and market a new all-purpose cleaner. You don’t want to spend precious product development research dollars or your marketing budget on features that consumers don’t want, so you decide to send out a survey. Chances are that it might look something like this:

Q: Which features are the most important to you when choosing an all-purpose cleaner? Mark all that apply:

  • Fresh scent.
  • Superior degreasing.
  • Natural ingredients.
  • Streak-free shine.

Now, when consumers are faced with a question like this, they’re likely to mark every feature: They want it all! But this skews results and doesn’t tell you which features are the most important. A MaxDiff survey delves deeper:

Q: Which features are the most important to you when choosing an all-purpose cleaner? Number in order of importance, with one being the least important and four being the most important.

  • Fresh scent.
  • Superior degreasing.
  • Natural ingredients.
  • Streak-free shine.

Now you’re asking consumers to trade-off or choose between different features to really understand where to spend the bulk of your development and marketing dollars. This way, you might find that consumers are more preoccupied with natural ingredients and don’t really care about the scent and can market your product accordingly.

MaxDiff is a way to shift the way you think about consumer responses and opinions. Rather than giving respondents carte blanche (and set you on a course of chasing your tail and trying to offer a perfect product that probably doesn’t exist) MaxDiff better pinpoints exactly what buyers want.

One Comment on “What is MaxDiff and When Should We Use It for Market Research?”

  1. Pingback: Decision Making: Emotional vs Logical - Upfront Analytics

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