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Choice

I begin every weekday by driving through a toll plaza on the Pennsylvania Turnpike to get to work. By this time, I haven’t usually had my morning cup of coffee yet; therefore, my mathematical skills are probably not always up to par. So, I take the easy way out and use my E-ZPass, which saves me the daily burden of counting out change to make my way through the toll booth.

Overall, the E-ZPass system seems relatively straightforward. You use a credit card to open an account and you receive an electronic tag, or transponder, that has your personal billing and vehicle information embedded into it. You put the transponder somewhere on the dashboard or windshield of your vehicle, which then sends a signal to a receiver as you drive through the toll booth that detects your tag, registers your information and charges your account accordingly. When all is said and done, you see the polite green light that says “Thank You” (unless you have a low balance, of course) and you are on your merry way. Quick and simple, right?

Before I began working in market research, I wouldn’t have thought much more about the E-ZPass system other than it gets me to where I need to go quickly. Now that I’m almost a year into my market research career with more of a research-oriented point of view, I got to wondering a little more in depth about the E-ZPass system and how the company conducted its research within the toll-user market to find out if its new toll system would prosper. After a little research, I found that the company used the ever-reliable conjoint analysis method of research.

The scholarly article, Thirty Years of Conjoint Analysis: Reflections and Prospects by Paul Green, Abba Kreiger and Yoram Wind, discusses the use of conjoint analysis in an abundance of studies throughout the past 30 years. One of the studies that this article focuses on is the research done prior to the development and implementation of the E-ZPass system. E-ZPass has been in the works for about 12 years now; the company began its market research in 1992. Two states, New Jersey and New York, had conducted conjoint analysis research using a sample size of about 3,000 to decipher the potential of the system. There were seven attributes used in this conjoint study, such as number of lanes available, tag acquisition, cost, toll prices, invoicing and other potential uses of the transponder. Once the respondents’ data was collected, it was analyzed in total and by region and facility. The study yielded an estimated 49% usage rate, while the actual usage rate seven years later was a close 44%. While both percentages were not extremely high, the company estimated the usage rate would continue to increase in the future.

Green, Kreiger and Wind make a fair point in their article when they say that conjoint analysis has the ability “to lead to actionable findings that provide customer-driven design features and consumer-usage or sales forecasts”. This study serves as a great example to support this statement just by looking at how close the projected usage rate from the data collected ended up being to the actual usage rate. An abundance of the studies that we execute here at TRC use conjoint analysis because of its dependable predictive nature. Whether clients are looking to enter a new product or service into the market, or are looking to improve upon an already existing product or service, conjoint analysis provides them with direction for a successful plan.

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Predictably Irrational

Posted by on in Choice

A few weeks back we decided to get a new TV. As a researcher I started doing my due diligence checking out a variety of sources. Our old TV had been around since the early days of HD and was a CRT to boot (though still HD - c'mon what do you think I am!). So I was really looking forward to buying something that weighed considerably less, took up a lot less space and looked a lot cooler. It was fun going through the various attributes - 760/1080, LCD/Plasma, LED backlighting, HDMI connections, Internet Apps, 3D! It's been a while since my engineering days when I studied the innards of TVs, and the technology has certainly evolved remarkably since then.

I narrowed my choices down to a few brands primarily based on the screen size that would fit the space, and really started focusing on a Vizio  model. As you may know, Vizio has become a real player over the last few years. Initially they competed on price, but more recently have made a splash with features and quality. Some of the reviews I saw online in fact, put Vizio near the top of the rankings. I was particularly taken by the Vizio Internet Apps (VIA) which makes it absurdly easy to get internet content directly on your TV. I was really looking forward to the Netflix app. Not being a current subscriber, the ability to stream so many movies simply and directly through my TV was huge. The price was very competitive too, so we decided to go with Vizio.

The purchase was made through Costco online and the TV arrived about a week later. After upgrading some accessories, I started connecting it. The process was very easy. The remote was simple and elegantly designed. Best of all it had a slide out QWERTY keyboard (a big hit with the kids) to access Facebook, Twitter, etc. The onscreen instructions for set-up were very easy to follow and the whole thing took very little time. Then we sat back to enjoy the content and that's when the trouble started.

The picture started shaking, froze and blanked out. Just for a few seconds. That's normal when connecting new devices, I assured everyone confidently. Then it happened again. And again. Uh oh!  When it didn't do any of this, the HD somehow became SD. I was getting very concerned, so I called Vizio's customer service. The rep tried a few things but nothing changed. He said they could send a repair person over "in 5 to 7 business days". Meanwhile I had unhappy kids at home and can't watch the Phillies or the NBA Finals. That did it. Off we went TV shopping again, but had decided to eliminate Vizio from our consideration set.

The rational part of me said the glitch in that one TV was very unlikely to be repeated again. Vizio has been tested by expert reviewers and gets high marks. The predictably irrational part said I would be a fool to buy the same TV again. Guess who won? So this time I bought a Panasonic from Best Buy after grilling the sales associate with endless questions. The TV worked beautifully right out of the box. It has the Internet apps I coveted, but the Vizio certainly had more features and flexibility. But no matter.

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Tagged in: Choice

Overthinking It

Posted by on in Choice

In his book on the neuroscience of decision making, How We Decide, Jonah Lehrer talks about the case of a patient who has damaged a part of his brain (specifically the orbitofrontal cortex) and is hence terminally unable to make any decisions. Every single decision, no matter how trivial, seems complicated to the point where it cannot be made. This is generally not a problem for most normal people, right? In fact, the accepted wisdom is that people are quite good at taking somewhat complicated decisions and simplifying them (in many cases rather efficiently) and moving on with their life.

Now there is new research from our friend Oded Netzer at Columbia and his colleagues Rom Schrift and Ran Kivetz that shows that not only do people simplify, but sometimes they also complicate the decision-making process unnecessarily. They studied this through a variety of experiments, many designed to rule out competing explanations. Let's talk about one of those to understand what they did.

Tagged in: Choice

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