Product-development and marketing managers know that customers make purchasing decisions on the basis of many criteria, including service quality, delivery speed and price. But since no company can excel in all aspects of service delivery simultaneously, companies must make trade-offs on the basis of what they do best, what criteria matter most to their customers, and what their competitors are offering.An August 2002 white paper, “Understanding Customer Value Drivers: A Key to Successful Service Management,” offers managers a way to assess customers' choices in order to optimize return on their product-development and customer-service investments. Authors Rohit Verma, associate professor of operations management at the University of Utah's Eccles School of Business, and Gerhard Plaschka, associate professor of management at DePaul University's Kellstadt Graduate School of Business, base their framework upon choice modeling (CM) — an approach first introduced in the 1970s by Daniel L. McFadden, Nobel Prize-winning professor of economics at the University of California, Berkeley.McFadden's research focused on both the economic reasons for individual choices and the ways researchers could measure and predict these choices.
