When dealing with a product or service that has numerous features or configurations, understanding what truly matters to your customers can feel like a puzzle. How do you balance competing preferences, like price, quality, and features, to create a product that resonates with your target market?
Custom choice modeling is a powerful solution that helps businesses tackle these challenges head-on.
By simulating real-world decision-making, choice modeling uncovers which features or combinations of attributes matter most to your customers, enabling you to design the perfect product or pricing strategy.
In this blog post, we’ll explore how custom choice modeling works, why it’s more effective than standard tools, and how it can provide the insights you need to make confident, data-driven decisions.
Choice modeling is a sophisticated technique used to understand customer preferences by mirroring their decision-making process. It helps determine which features or attributes of a product or service are most important to your target audience and how they trade off between different options, including pricing.
This advanced analytics technique is especially useful when designing a product with numerous features or configurations, such as a vehicle, subscription service, menu options, or tiered pricing plans.
Traditional survey questions asking about preferences often fall short of delivering actionable insights.
While consumers might say that price, quality, or brand reputation are all important factors, this information alone doesn’t help you develop the best product. Choice modeling navigates these variables and allows you to optimize your offerings in line with customer demand.
Understanding customer preferences is paramount. Whether designing a new product with hundreds of features where you’re trying to optimize design combos, refining a credit card offering with dozens of optional benefits to define a perfect combination, or optimizing your pricing strategy with endless packages, choice modeling provides invaluable insights.
For example, from a customer perspective, it might be easy for your target audience to say everything is critical when choosing canned soups for their family. The challenge isn’t simply knowing that price, taste, healthiness, and brand reputation matter—it’s about understanding how these factors influence each other and which combinations will resonate most with your audience.
Custom choice modeling handles this complexity, offering comprehensive learnings that go beyond simple survey responses and providing you with optimized designs, pricing strategies, and offerings.
In the market research industry, off-the-shelf solutions often fall short when it comes to handling the complexities of real-world scenarios. Many platforms offer standardized, canned tools for advanced analytics like Conjoint Analysis, TURF (Total Unduplicated Reach and Frequency), and segmentation. While these platforms promise to streamline decision-making, they often fail to address the unique nuances of your specific research needs.
Standardized tools may be easy to use, but they can’t always accommodate complex designs, especially when you have multiple layers or exclusions where certain features can’t be shown together.
For example, in a product design study, certain features might only be available together in high-tier models, and a generic platform could easily mishandle this constraint. As a result, the output may lack the necessary nuance, leading to inaccurate or incomplete insights.
So, when you’re working with these generic platforms, you might ask yourself:
This is where custom choice modeling makes a significant difference. By crafting a choice model tailored to your research objectives and market complexities, you ensure that your insights team is equipped with robust, actionable data that supports informed decision-making.
Many survey and analytical software packages offer the design of experiments (DOE) capabilities, leading some to believe they can handle choice modeling in-house.
However, these tools often struggle when confronted with real-world constraints you might be facing for product optimization or accounting for complex layers of attributes and levels of product features.
Custom choice modeling accounts for the unique aspects of your product or service, including exclusions, interdependencies, and custom variables. This level of personalization ensures that the insights are more aligned with your actual market and consumer behavior.
While standard tools might struggle with product configurations, feature exclusions, or custom pricing strategies, custom choice modeling handles these complexities with ease. Whether it’s a high-end product with several unique features or a service that has multiple tiers, custom models simulate how your customers would make trade-offs, offering insights into the best possible combinations of features, price points, and messaging.
Custom models go beyond a one-size-fits-all approach to capture specific preferences, preferences for different segments, and intricate product details. This allows for more accurate and relevant insights, which are essential for high-stakes decisions like new product launches or market expansions.
With custom choice modeling, you control the entire process—from survey design to analysis and simulations. This flexibility allows you to experiment with different combinations of variables, test various scenarios, and easily incorporate feedback or adjustments as the project progresses.
It also prevents you from being at the mercy of a pre-built platform, which often utilize algorithms lacking transparency.
Custom simulators can generate actionable insights that support immediate decision-making. These insights can be used for everything from pricing optimization to product design to market segmentation. By focusing on the variables that matter most to your stakeholders, you can present clear, actionable results that move the needle for your business.
Recommended Reading: Using a Conjoint Choice-Based Model to Determine Product Cost
Custom choice modeling provides insights that can be valuable to multiple departments, including product development, marketing, strategy, and operations. This alignment ensures that every team is working from the same data, helping everyone stay on the same page and supporting strategic decisions across the board.
Custom choice modeling allows you to fine-tune your products, services, or marketing messages based on deep insights into customer preferences. This helps you stay ahead of the competition by offering exactly what your target market values most, giving you an edge in a crowded marketplace.
At our market research firm, we leverage a variety of advanced choice modeling techniques to ensure we can tailor our approach to meet the specific needs of your project. These techniques range from basic models that help identify broad patterns to more complex models that provide deep insights into individual preferences. Here are some of the primary types we use:
Choice Modeling Techniques:
Early Models:
Individual-Level Models:
These models allow us to dive deeper into individual preferences, offering more granular insights and understanding of how trade-offs are made at the individual level. They are invaluable for generating more accurate and actionable data.
Our choice modeling market research company takes a consultative approach to choice modeling, ensuring that the design perfectly aligns with your objectives. Our process involves:
Custom choice modeling provides valuable insights that can directly inform decisions across various functions within your organization. However, it’s not enough to simply collect data; it’s crucial to know how to interpret and apply that data in a way that drives action. By leveraging custom simulators tailored to specific needs, you can unlock the full potential of your data to make informed, strategic decisions.
Here’s how you can turn the data from custom choice modeling into actionable insights:
Custom simulators can be designed with intuitive interfaces that enable sales teams to explore different product configurations and understand how they might affect sales performance. By testing different combinations of product features, pricing models, and other variables, sales teams can forecast which options are most likely to succeed in the market. This approach helps to identify high-value products and make adjustments based on customer preferences and demand patterns, ultimately improving sales strategies.
How to use the data:
Research teams benefit from custom choice modeling data by gaining deeper insights into customer preferences and behavior. Custom models can highlight which features resonate most with different customer segments, revealing opportunities for product optimization or new offerings. By analyzing trends in customer choice behavior, research teams can gather the data needed to refine products or services and ensure they align with market demands.
How to use the data:
Custom choice modeling is an excellent tool for scenario planning and “what-if” analysis, providing insights into the potential outcomes of different product or service strategies.
By evaluating various scenarios, such as introducing a new feature or altering the pricing structure, organizations can assess how these changes might impact customer choices and market share. This data can guide long-term strategic decisions, helping to optimize product portfolios, marketing approaches, and pricing strategies.
How to use the data:
In these case studies, we showcase how custom choice modeling helped clients optimize their product offerings and make informed decisions based on real customer preferences. By using tailored simulators and data-driven insights, both companies were able to refine their strategies and drive deeper customer engagement.
A national payroll, HR, and tax services company wanted to refine its wage pay product and find the most appealing configuration for its customers. Their goal was to understand what would motivate customers to use the card and identify potential barriers.
Using custom choice design, we built a range of payment options, including:
The results revealed an optimal card configuration that was competitive in the market. Additionally, the custom simulator provided the client with the flexibility to explore further options, helping them make data-driven decisions.
Try Our Dynamic Simulator Here
A multinational financial software company wanted to enhance its budget management app to boost customer engagement and expose users to more product offerings. They sought to validate their product-market fit by understanding the right features, messaging, and partnership opportunities.
Using custom choice design, we created a concept that tested new features, three levels of messaging, and potential partnership options. The results helped identify a winning concept, giving the client several strategic options for partnership discussions.
With the help of a custom simulator, stakeholders could explore different scenarios, setting clear expectations for the app’s performance and future development.
We recently had the opportunity to work with a client on a complex project involving the design of new shampoo bottles. By using choice-based design, we crafted specific attributes and levels for the bottles, incorporating prohibited level pairs to ensure realistic options.
The real magic happened when we introduced real-time visuals, allowing respondents to see the bottle design update as they selected different attributes and levels.
This dynamic approach helped customers clearly visualize the impact of their choices, which would have been impossible with static images alone. By applying our expertise, we delivered a robust model that provided valuable insights into customer preferences, guiding the client toward a design that resonated with their target audience.
If you’re seeking professional guidance on a choice-based research project or a choice-based conjoint analysis (CBC) study, custom choice modeling could be your key to success. At Drive Research, we specialize in crafting customized choice models that address your unique challenges and provide robust, actionable insights to support your strategic decisions. Ready to get started? Reach out today to see how custom choice modeling can elevate your business decisions.
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