• strategy+business , Wednesday, November 12, 2008 10:45 AM

However bleak the shoppers' psyche at the moment, Booz & Co. consultants John Jullens and Gregor Harter will have none of it. We will, after all, still transact in some way, frugal or not.

"What does the consumer want?" they ask. "Why do individuals prefer one product or service over another? And how, precisely, do most consumers make their purchasing decisions?"

These questions need not baffle marketers a minute longer if they employ "consumer choice modeling." Pray tell, you ask?

Initially developed in the 1960s by Nobel Prize winner Daniel McFadden, the model explores why individuals make specific trade-offs among various product options. Constrained by paper-and-pencil surveys, the model initially lacked sophistication. But thanks to such whiz-bang goodies as broadband Internet access, digital imaging, video, and faster computing speeds, researchers can, well, get better results. They illustrate this with a case history of the mobile phone market (plot spoiler: Apple did most things right with its initial iPhone rollout, except price).

Jullens and Harter also suggest that hybrid-electric vehicles would be a "perfect research topic" for consumer choice modeling. I hope they're not counting on a call from General Motors (see below).

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