Consumers now days are flooded with innumerable choices to fulfill all sorts of needs and requirements. How do they choose one above others, is it a random decision or rather a calculated one? At times we see some superior product getting rejected by the consumers market, on the other hand some seemingly average products end up selling like hot cakes. Is it by sheer chance or there's some powerful marketing tactics involved? What exactly makes a consumer shed out money and purchase some product or service? Choice modeling basically provides the answer to some or all of these questions by analyzing the selection making process of individuals, when they have different alternatives.
To be more precise, it's mainly a study of behaviors, what's more important for a marketer than knowing how a consumer will behave when presented with different choices. For example, a man wants to take his family out for dinner, he has got a number of restaurants to choose from but he will choose only one. The selection will most probably be based on the quality of food, hygienic conditions, rates, or maybe the atmosphere of the place. If you are running a restaurant business (or you are responsible for marketing one) that caters families, you must be able to predict what the decisive factors are. Choice modeling can help you in this regard, even if it is a theory coined mainly for the subject of economics by the Nobel Prize winner, Daniel McFadden.
A typical consumer is always looking to get the maximum advantage out of each dollar he/she spend. A great example is when one goes out to purchase a mobile phone with a fixed budget and a set of features (e.g. color, weight, size, price, memory or camera) that he/she wants to obtain with the new cell phone. A very interesting aspect of choice modeling is the process of how the customer trade off between different features. In our example of mobile phone, a customer may let go some of the required features if presented by a very inexpensive one. On the other hand he may be willing to pay more than his initial budget if he finds a mobile phone with exact set of features that he was looking for. Being a marketing person, it's great to have such valuable information before launching or even planning your product. That is why research and choice modeling is so important; a survey among your targeted customers will result in a wealth of information that will surely curtail the level of risk, you are going to take.
