Research Topics:

Data Analysis | Discrete Choice Modeling | Product Development Research

Content Type:

Glossary

Choice Modeling Definition

Choice models are able to predict with great accuracy how individuals would react in a particular situation by attempting to model the decision process of an individual or segment in a particular context. Predictions are able to be made over large numbers of scenarios within a context, to the order of many trillions of possible scenarios.

Choice modeling is a statistical and analytical technique used to understand consumer preferences and behaviors. Models can accurately predict how people would react in a particular situation by attempting to imitate the decision process of an individual or segment in a particular context. With the technique, individuals are presented with various choices, often in the form of product or service options. Their selections are analyzed to uncover underlying preferences and decision-making patterns. Predictions are able to be made over many scenarios within a context, to the order of many trillions of possible scenarios. The key to choice modeling is its ability to uncover the "why" behind consumer choices. It studies the factors that drive decision making, such as pricing, features and brand loyalty. Choice modeling helps in predicting how consumers might react to new products, pricing strategies or other marketing initiatives. 

Who relies on choice modeling?

Businesses, marketing professionals and market researchers use findings from choice modeling to make informed decisions about product development, pricing, market segmentation and promotional strategies. Simply put, choice modeling is valuable in understanding customer preferences and optimizing products and services  to align with consumer preferences.

Why should I care about choice modeling?

Insights gained through choice modeling can lead businesses to develop more effective marketing strategies and improved product offerings. Understanding what influences consumer choice can lead to marketing efforts that resonate with the target audience, thus leading to better customer satisfaction, increased sales and a competitive advantage in the marketplace.