Printed
with permission from TCI
Management Consultants. A group of senior-level management
consultants, offering strategic planning and marketing services
to a wide range of public and private sector clients.
The
Laws of Choice - Predicting Customer Behavior
by Eric Marder
The Free Press, New York, 1997
ISBN 0-684-83545-2
Eric Marder is the Founder and Principal of Eric Marder
Associates, a New York-based advertising research firm.
For forty years he has been in this business, and along
the way has developed a theory of choice, which he articulates
in this, his only book. It is a theory of how people make
decisions, and in particular, how market research can measure
choice preferences in a meaningful way (in order to extrapolate
the findings of market research to the real world, and accurately
predict consumer behavior).
A big
problem with much of today's market research, Marden says,
is that the various questionnaires, focus group sessions
and interview techniques used, do not replicate in any way
the real world choice situation that the consumer faces.
Rather, most techniques abstractly ask respondents which
brand they might prefer, or how they might feel about something
using a semantic differential scale, or how they might rate
something on a 1 to 7 measure... questions that have no
bearing upon how people really think and behave in a choice
situation. This kind of analysis he terms, rather disparagingly
Descriptive Research, and he distinguishes it from Choice
Research, the particular type of market research in which
he specializes.
Forty
years of experience have led Marder to formulate the basic
axiom of Choice Research as follows:
"The
main concern of Choice Research is the congruence between
the choice situation in the questionnaire and the choice
situation in the world." (p. 378)
What
does this mean, you ask? Well, follow this: Marder sees
a brand as having two aspects: label and fable. The 'label'
is the packaging, look, colour, etc. of the product; the
'fable' is the feeling that is conveys to the purchaser.
When you are in a market research situation trying to determine
the market reaction to alternative products, then you have
to design the experimental situation so that first, all
brands are available to be chosen, and second, that their
brand attractiveness (i.e. the 'label' and 'fable' aspects
of each) is replicated (i.e. is congruent with the real
world situation). If this is done, then the choice preferences
revealed by the market research will mirror the real choice
preferences seen in the marketplace.
"...
it doesn't matter whether the choice consists of voting
in a booth or voting in a survey. It doesn't matter whether
it consists of selecting a brand from a shelf or electing
a brand while playing a game in a questionnaire. Provided
we can keep the competitive frame, the information and the
accessibility the same in the questionnaire as in life,
the choices in the questionnaire will be the same as the
choices in life. By saying that the information in the questionnaire
is the same as the information in life, I mean that the
totality of what the customer knows about the brands at
the time of making choices in the questionnaire is the same
as the totality of what she knows about the brands at the
time of making the choices in the supermarket. The central
idea is simple enough, possibly self-evident." (p.
36)
Based
upon this fundamental principle, Marder has formulated three
'laws' of choice:
(1)
THE LAW OF CONGRUENCE: Congruent choice situations have
congruent choice vectors. (Think of a Œchoice vector¹
as simply the probabilities of choosing various brands within
the competitive frame - that is, the set of all brands being
considered.)
(2)
THE LAW OF PRIMACY: An individual for whom, at the moment
of choice, n brands are tied for first place in brand strength,
chooses each of these brand with probability 1/n.
(3)
THE LAW OF PERSISTENCE: The effect produced by a message
is made up of two components: a transient effect and an
intrinsic effect. The transient effect decays rapidly. The
intrinsic effect lasts indefinitely.
Based
upon these three laws, Marder has designed three specific
market research techniques which enable the researcher to
determine choice accurately. According to Marden, they have
been tested empirically hundreds of times (in terms of his
market predictions having been proven correct by subsequent
actual market experience). These techniques (described at
dreary length in the book) are:
STEP (Strategy Evaluation Program) - This research methodology
follows directly from Marder's first law, and is used to
determine how the likely market share of a product may differ
under alternative branding strategies. In this two-step
market research methodology, respondents first are given
a booklet with information about all possible brand choices,
and asked a few questions about the extent to which they
like each. They then are given a certain number of stickers,
which they allocate to the brands, giving s many or as few
stickers as they want to each one. The share of all stickers
that each brand receives when the results for all respondents
are totaled up correlates to its actual market share. By
varying the information that respondents get about the particular
brand under consideration (and keeping the information provided
about all other brands the same) the most effective branding
strategy can be determined.
VEST (Volume Estimation Test) - This is a method for estimating
the likely market penetration of new or repositioned products
based upon the ownership of items in other product categories
that are not substitutable for one another (e.g. cell phones,
toasters, VCRs). Respondents are presented with a list of
these non-substitutable items (including the new product
to be tested) and asked to indicate whether they would like
to own the product, and whether or not, in fact, they do
own the product. The results are then tabulated, and an
adjustment made for differences between the 'want to own'
and 'actually own' scores for all products except the subject
product. The 'want to own' score for the subject item is
then adjusted by this factor, to arrive at an estimated
market penetration rate for the product.
SUMM
(Single Unit Marketing Model) - This methodology follows
from Marder's second law as articulated above. This is a
procedure to estimate the attractiveness of various product
attributes, and their contribution to overall brand choice
on the part of an individual. A set of mutually exclusive
product attributes (that are meaningful when considering
the type of product being assessed) are listed, with various
categories within each identified. (For example: 'colour'
might be identified as one product attribute, and various
sub categories within it specified: red, green, blue. 'Shape'
might be another product attribute, and given the options
square, round and oval. And so on, where as many as ten
or twelve such product attributes are specified.) Respondents
are then asked to select their preferences for each product
attribute, allocating 100 points among the choices for each
attribute (e.g. they may give 60 points to 'blue' for colour,
and 20 points each to'green' and 'red', indicating a strong
preference for blue'). Next they indicate whether each brand
in the set of products being considered reflects each possible
sub-category of the product attribute, scoring a simple
'yes' or 'no' on each (e.g. they may indicate a belief that
believe that 'product X' is available in blue only). Summing
and weighting the results of this analysis for an individual
allows a prediction of the brand choice of that individual
in the marketplace, and the cumulative results of this analysis
for many individuals enables overall market share estimates
to be made. However, the real use of this technique is in
determining how manipulating the attributes of the product
or service in question will impact on market share - a very
powerful technique indeed!
Much of the book is devoted to discussing the use of these
techniques in various measurement situations, including:
- concept
testing
- price testing
- product
testing
- brand
positioning
- market
share determination
- measuring
the impact of print ads
- measuring
television commercials
- measuring
television campaigns
- budget
allocation across brands
Throughout the book, Marden presents various 'principles'
of Choice Research (28 in all) which are various reformulations
and statements of the implications of the three laws. Some
of these are useful marketing research 'rules of thumb',
such as:
The Selling Strategy Principle: Explicitly or implicitly,
every brand has a selling strategy that consists of the
same universal syllogism: Because my brand has attributes
A,B,C,...... it will satisfy your desires X,Y,Z,...better
than any other brand.
The
Price Effect Principle: On the average, a price increase
of 10 percent will produce a share decrease of around nine
percent, but there is a great deal of variability in this
result. One time in five the loss will be much larger, and
one time in five there will be no loss at all.
The
Name Principle: A name is worth money. For durables, a good
name may permit charging as much as twenty percent more
for the brand, on the average; in some cases, as much as
fifty percent more. It can also be of comparable value for
consumables, but only rarely.
The
Image Principle: A brand's future is built on its past.
It is easier to give a brand the right image in the first
place than to change a wrong image once it has taken hold.
The
Laws of Choice is a difficult and highly technical book
at times, but contains some extremely useful insights and
research techniques. It should be required reading for all
market researchers.
The
above summary has been provided to you compliments of TCI
Management Consultants
