Discrete Choice Analysis Makes Comparing Apples to Oranges Possible

Discrete choice lets you understand how your market makes relevant apples to oranges comparisons. Sawtooth Technologies provides an example question for this type of scenario.

It’s like comparing apples and oranges. ‘Nuff said, right? Social norms seem to dictate that as soon as that statement is made all discussion must come to a complete halt.

I’m looking over my shoulder as I’m typing this in case the social norm police are around, but, what if you can compare apples and oranges? In fact (looking over my shoulder again), I know that you can. Or, at least you can compare people’s preferences for apples versus their preferences for oranges.

Comparing Preferences for Substitutes
OK, obviously I’m not talking about apples and oranges specifically. Instead I’m talking about products or services that are comprised of different characteristics or attributes, especially when those products or services can be substituted for one another.

As a typical example, take the age old question of how to get to work. There are a variety of approaches, but let’s pick three of them for the purposes of this example: driving, biking and taking the bus. Each of these approaches is broken down into attributes, such as: travel time, protection from the elements, cost, etc. But taking the bus has at least one attribute that the others don’t: pick-up intervals, that is, the time between one bus stopping at your spot and the arrival of the next bus.

You can imagine that someone focused on convenience would predominantly choose the car in most situations, but the closer the bus pick-up intervals get to zero, the more the bus would become an option and other attributes might take on greater importance. Now the question becomes, how can you conduct research that will help you make these comparisons?

Making Sense of Apples and Oranges
If you have studied the fundamentals of conjoint analysis or discrete choice, you know that each of these advanced market research techniques break products or services down into their various attributes and then require survey respondents to make tradeoffs among a variety of combinations of attributes. You have learned that conjoint and discrete choice also provide powerful market simulators that provide “what if” analysis of an almost unlimited number of competitive scenarios.

But you might also have only seen just that – directly competitive products or services being studied and analyzed. One type of car vs. another type of car. Often even in the same category. Traditional conjoint analysis is limited to these types of scenarios, where you are comparing like products. But, discrete choice is not.

Discrete choice analysis or choice-based conjoint lets respondents make a choice, picking from a realistic set of options. Because of this approach, your team can design a study that can make apples to oranges comparisons. You can determine which of your respondents would rather drive a car or take a bus and how bus-specific attributes would impact those preferences.

Here’s an example of what one of these discrete choice questions would look like.

The Ubiquitous Nature of Apples and Oranges
Once you know you can understand the preferences of your target market from among a variety of substitutes, you will realize that this can provide you a whole new world of insights about your space. In the health industry, you can study patient or doctor preferences for surgery versus physical therapy, for example. In human resources, you can study employee preferences for monetary compensation versus recognition. In technology, you can study email versus social networks. The list is endless.

And importantly, with modern discrete choice software this type of research is no longer prohibitively impractical. Comparing apples and oranges is the type of research that consultants with discrete choice experience can accomplish on a regular basis. So, instead of research stopping when someone says it’s like comparing apples and oranges, now you know that that’s where the quest for new wisdom can begin.

- February 2010

This content was provided by Sawtooth Technologies. Visit their website at www.sawtooth.com.