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Working Paper

Understanding Consumer Preferences for Complex Products: A Web-based Method

Young-Hoon Park, Min Ding, and Vithala R. Rao, 2007 [07-103]

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The complexity of new products poses a tremendous challenge to marketers who need to understand consumer preferences for product attributes and attribute levels. In this study, authors Park, Ding, and Rao develop a Web-based upgrading method for eliciting consumer preferences in complex products.

Their method is based on the widely-used self-explicated approach which directly asks individuals about their preferences, then combines these to obtain corresponding preferences for a given product. However, they improve on the benchmark approach in several ways. First, they “incentive-align” subjects to truthfully state the amount they are willing to pay for a given product upgrade. Second, they employ a realistic task that most people are familiar with: upgrading from a “barebones” product, one attribute at a time, to a most-preferred configuration, given the cost of each upgrade.

To test the upgrading method empirically, they conducted a within-subject experiment comparing the upgrading method and the benchmark self-explicated approach using digital cameras (with 11 attributes and 60 levels in all). Each of 88 study participants completed a self-explicated task, an upgrading task, an external validity task, and a brief survey.

The preference structure uncovered from the Web-based upgrading method had superior external validity than that uncovered from the self-explicated method. Specifically, the upgrading method led to significantly better predictive performance: the percent of matches between actual choices (from the external validity task) and the top predicted option were 42% for the upgrading method, versus 27% for the self-explicated method as compared to the baseline prediction of 6% in a naive model (i.e., random selection of 1 in 17 choices).

Finally, the upgrading method took less time to complete than the self-explicated approach, and subjects appeared to enjoy the upgrading method more than the self-explicated approach and were much more involved.

Overall, their study provides strong empirical evidence for the validity and managerial usefulness of the proposed upgrading method in understanding preferences for complex products.

Young-Hoon Park is Assistant Professor of Marketing and Vithala R. Rao is the Deane W. Malott Professor of Management and Professor of Marketing and Quantitative Methods, both at the Johnson Graduate School of Management, Cornell University. Min Ding is Assistant Professor of Marketing at the Smeal College of Business, Pennsylvania State University. All authors have contributed equally to this article.

Included in the following collections:
MSI Reports 2007

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