So... is it the blue packaging and the $50 rebate that drove your recent uptick in sales? Or was it your brand name coupled with a set of features that your clients have been asking your team to add for years? Nine times out of ten a company can't answer the basic question "what about my solution is truly driving sales?" Look, most of you don't think of marketing as science... but the best marketing is indeed just that! Most organizations have no real scientific method for understanding what features, functions, pricing, packaging and services associated with their offerings will yield the most revenue and/or the most market share. But believe it or not there is a scientific method for determining what levers to pull on your offer to make the most attractive offer in a given market. Its called a Choice Model.
A Choice Model answers the core questions about what customers value most -- what will they pay for versus what they say they will pay for. Its a quantitative technique to understand in detail the revenue, demand and market share implications of modifying the different levers around your offer -- pricing, packaging, store placement, target customers, competitor activity, media, messages, geographic areas, the brand, product usability, services add-ons etc. and any combination of these.So how does it work? A customer or potential customer is given a "choice card" which contains the values of the key levers... for the sake of argument, lets look at a consumer brand, say we want to look at pricing, packaging, and brand of Kiehls face cream for women, with the intent to see how we can increase sales and by how much.
The respondent would look at two cards that had the price, the package type and the brand (Kiehls v. Competitor) and you'd ask them based on the values of the price, the package type and whether it was Kiehls or not, which product would they would buy. You would then begin to alter the values, say decrease the price of one of the products (Kielhls or its competitor) by 20 cents and see if that would affect purchase decision. Or you would remove the brand, and just do a side by side comparison of pricing and packaging to see which one is preferred... by adding brand back in to the mix then you can quantify the effect your brand has on purchase intent.
How about a B2B Brand? It works here too. Lets look at ARAG, a provider of legal benefit services. One can construct a choice model around the various legal services that are provided, and put them side by side with a competitors. By modifying the values of these services, changing them up in a systematic fashion, you can build a model of how to change the services portfolio, pricing, delivery mechanism, etc. to alter demand and ultimately consumption of ARAG legal benefit services.
You can even extend this to the customer experience itself. For example, if a brand has outlined a customer experience plan, or you have a current experience in place, you can choice model which of the planned enhancements or elements of the current experience have the most impact on customers... many times you will find that what you think will impact the experience doesn't align with what will motivate a customer to buy based on that experience.
Depending on the circumstances, this may be done through either structured in-market experimentation or historical analysis, or a mix of the two. There's a whole host of quantitative techniques... conjoint, orthogonal, discrete modeling that can be used to get at the answers you are looking for. In retail for instance, you'd want to use a discrete choice model (like I described above.) What's also cool about a Choice Analysis is that you can run "war games" against your competition and figure out which positioning, which product enhancements, what pricing will be most advantageous to your brand and most damaging to your competitors'.
Gains from a choice analysis can be dramatic. At clients that I've worked with we discovered that by making slight modifications to their offer they've dramatically altered their market stance in given markets. Its amazing what happens when you actually involve your customers in your business!