Models for sales promotion effects based on store-level scanner data

In marketing, one is interested in how consumers react to products in the marketplace. The marketeer wants to know what makes a product attractive and what price consumers are willing to pay for a product, or for a specific feature of a product. Conjoint analysis is a technique to measure preferences or utilities of consumers for certain characteristics of products or services. Based on the results of a conjoint experiment, a wide range of marketing questions can be solved. A conjoint study, for instance, may answer the question what features of a product are preferred by consumers and what price they are willing to pay for these features. Furthermore, the introduction of a new, or modified, product will have consequences for the market shares of brands in the market. With conjoint analysis a prediction can be made how these market shares will change as a result of that introduction. In conjoint analysis respondents are asked to indicate their preference for a certain product. For that purpose, products are defined on a limited number of key attributes, each with a limited number of levels. Based on these attributes and levels a set of (often hypothetical) products (called profiles) are constructed. The traditional way to measure the preferences of respondents for these profiles is to let them rank the total set of profiles or to let them rate each of them, for instance on a 0-100 scale. However, ranking and rating of products is not how respondents normally act in the real marketplace. In the conjoint choice approach respondents do not have to give a score to all profiles, including the non-preferred ones, but they have to choose their most preferred product from a small set of profiles. In this case, the total set of profiles is divided into several smaller choice sets from which respondents have to choose one product. Since this way of selecting a preferred product is much closer to the way people select products in the real marketplace, conjoint choice experiments have become very popular