INTELLIGENCE: New developments, research and ideas in management

Research Brief

Predicting Customer Choices

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Vanishing mass markets and the proliferation of products and services and new technologies are requiring many companies to redefine the core business doctrine: "Give customers what they want." At the same time, consumer decisions are becoming increasingly complex, thanks to an abundance of choices. The same is true for decisions in many business-to-business markets. The underlying problem in predicting customer choices, the authors argue, is that many people make purchasing decisions on the basis of many different criteria simultaneously (including brand, quality, performance, price and service). However, it is virtually impossible for any firm to excel in all product aspects at once. Therefore, the authors say, firms need to make trade-offs on the basis of what they do best, what their competitors are offering, and what criteria they think matter most to their customers. The authors review the research on choice modeling and how it can be used to explore the differences between managers’ beliefs about the customer’s needs and wants and the customer’s actual needs and choices. For managers seeking reliable feedback on how customers view their offerings, choice modeling provides a rigorous way to turn customer-driven feedback into profitable and sustainable strategies for retaining or capturing market share.

Rohit Verma is an associate professor and Thayne Robson Fellow, David Eccles School of Business, University of Utah. Gerhard Plaschka is an associate professor of strategy and venture management, Kellstadt Graduate School of Business, DePaul University Chicago. Contact them at rohit.verma@business.utah.edu and gplaschka@mindfolio.com.

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