Introduction

The purpose of this chapter is to illustrate practical aspects of studying consumer choice behaviour in academic and commercial marketing settings using SP methods. The two case studies presented emphasise marketing applications, but nevertheless should be more broadly interesting to and useful for students of SP theory and methods.

SP preference elicitation methods have been used in academic and commercial marketing applications since the 1960s, and indeed, no other discipline has so widely and warmly embraced them. Rather than retrace well-known and well-worn topics and issues, this chapter tries to synthesise advances and insights from the past fifteen years with specific emphasis on advances in probabilistic discrete-choice models.

The case studies address the following topics:

• Case study 1 deals with whether preference heterogeneity or variance heterosce-dasticity is best able to describe consumer choices of brands of frozen orange juice concentrate. We investigate whether certain consumer characteristics (propensity towards planned shopping and deal proneness) are associated with differences in consumer attribute sensitivities, differences in choice variability or both. These types of behavioural differences matter in marketing applications because their policy implications are very different;

• Case study 2 investigates choice set formation and its impacts on choice model outcomes. This case study deals with the difficult issue of properly specifying choice sets for consumers studied in choice modelling exercises. We show that misspecification of choice sets can have dramatic effects on choice model results and strategic marketing inferences derived therefrom.