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Article
Publication date: 8 April 2014

Christian Schlereth

In cooperation with a German online retail bank, the aim of this paper is to investigate how the bank should price a new fee-only financial advisory service. Two types of…

1143

Abstract

Purpose

In cooperation with a German online retail bank, the aim of this paper is to investigate how the bank should price a new fee-only financial advisory service. Two types of pricing plans differ in terms of their strategies for determining monthly prices: a fixed monthly price that is identical for all clients (i.e. a flat pricing plan) or a monthly price that varies as a function of each client's assets under management (i.e. a volume pricing plan).

Design/methodology/approach

With a discrete choice experiment, this article studies client preferences for the two types of plans. To ensure that the respondents understood the financial consequences of their decisions, a price calculator was embedded into the discrete choice experiment to enable the respondents to determine their individual monthly prices based on their assets under management.

Findings

Methodologically, the price calculator is useful for simplifying mathematically complex decisions, and it provides additional valuable information for analysis. Substantively, the results show that clients perceive both types of pricing plans as equally attractive; however, the service provider's revenues would increase by up to 12 per cent if it uses the volume pricing plan.

Originality/value

This research extends the stream of literature on the measurement of pricing plan preferences and offers guidance for service industries, such as telecommunications, cloud computing services, insurances, or transportation. It extends the use of discrete choice experiments to study client preferences for different pricing plans and also integrates a decision aid, i.e. a price calculator, in the experiment to assist clients in comparing alternatives more effectively.

Details

European Journal of Marketing, vol. 48 no. 3/4
Type: Research Article
ISSN: 0309-0566

Keywords

Book part
Publication date: 30 May 2018

Arne Risa Hole

Patients and health professionals often make decisions which involve a choice between discrete alternatives. This chapter reviews the econometric methods which have been…

Abstract

Patients and health professionals often make decisions which involve a choice between discrete alternatives. This chapter reviews the econometric methods which have been developed for modelling discrete choices and their application in the health economics literature. We start by reviewing the multinomial and mixed logit models and then consider issues such as scale heterogeneity, estimation in willingness to pay space and attribute non-attendance.

Details

Health Econometrics
Type: Book
ISBN: 978-1-78714-541-2

Keywords

Open Access
Article
Publication date: 27 August 2020

Dieter Koemle and Xiaohua Yu

This paper reviews the current literature on theoretical and methodological issues in discrete choice experiments, which have been widely used in non-market value…

3274

Abstract

Purpose

This paper reviews the current literature on theoretical and methodological issues in discrete choice experiments, which have been widely used in non-market value analysis, such as elicitation of residents' attitudes toward recreation or biodiversity conservation of forests.

Design/methodology/approach

We review the literature, and attribute the possible biases in choice experiments to theoretical and empirical aspects. Particularly, we introduce regret minimization as an alternative to random utility theory and sheds light on incentive compatibility, status quo, attributes non-attendance, cognitive load, experimental design, survey methods, estimation strategies and other issues.

Findings

The practitioners should pay attention to many issues when carrying out choice experiments in order to avoid possible biases. Many alternatives in theoretical foundations, experimental designs, estimation strategies and even explanations should be taken into account in practice in order to obtain robust results.

Originality/value

The paper summarizes the recent developments in methodological and empirical issues of choice experiments and points out the pitfalls and future directions both theoretically and empirically.

Details

Forestry Economics Review, vol. 2 no. 1
Type: Research Article
ISSN: 2631-3030

Keywords

Article
Publication date: 11 April 2008

Wiebke Unbehaun, Ulrike Pröbstl and Wolfgang Haider

The purpose of this paper is to survey climate change impacts on winter sport tourists' activity and destination choice, to estimate shifts in customer demand and to…

5891

Abstract

Purpose

The purpose of this paper is to survey climate change impacts on winter sport tourists' activity and destination choice, to estimate shifts in customer demand and to provide recommendations and decision support for destination management.

Design/methodology/approach

A total of 540 skiers from Vienna, Austria were surveyed with a standardized online questionnaire. The survey also contained a discrete choice experiment a stated preference method which forces respondents into trade‐off behavior between various possible combinations of destination profiles.

Findings

The results show a strong preference for destination attributes promising sufficient (natural) snow conditions. In winters that lack snow, resorts in high destinations gain importance and travel distances lose some relevance. A large proportion of skiers would forgo skiing if it becomes more expensive. Snow independent substitutes are accepted as a short time compensation but not for the whole winter holiday. When asked to trade off additional costs and additional travel distances for a snow secure destination, the majority of winter sport tourists are willing to incur some additional cost but the majority reach thresholds at about 10 percent additional cost and 2h additional driving.

Originality/value

The survey shows, that a discrete choice experiment is a suitable method to cover the complexity of activity and destination choice. Therefore it is an unique individual‐oriented approach to consider customer demand and to evaluate the success of offer setting in tourism management. The sequential presentation of three related choice sets is a novel contribution in the field of choice experiments, and appears to be well suited to simulate climate change‐related effects.

Details

Tourism Review, vol. 63 no. 1
Type: Research Article
ISSN: 1660-5373

Keywords

Article
Publication date: 3 October 2016

Emma Hall, Wayne Binney and Julian Vieceli

Operatic events are an important sector of the performing arts industry and are currently facing the challenges of decreasing demand and price-based competition from other…

1581

Abstract

Purpose

Operatic events are an important sector of the performing arts industry and are currently facing the challenges of decreasing demand and price-based competition from other sectors of the performing arts industry. It is posited that adding value and ensuring satisfaction may enhance consumer loyalty, and therefore, the likelihood of sales and continued subscriptions may be increased. The purpose of this paper is to examine bundling as a marketing management technique for opera companies and hypothesises that offering attractive “package deals” that bundle various benefits with the seat ticket may increase participation and loyalty.

Design/methodology/approach

A discrete choice experiment with opera patrons is used to evaluate the application of bundling to improve increased demand and loyalty.

Findings

It is concluded that offering bundles creates a greater likelihood of customer satisfaction and favourable behavioural intentions, which may lead to increased loyalty. Participants expressed strong support for value-added elements. Such package deals included a variety of elements: opportunity for a visit backstage to meet the cast, informative introductions to operas and facilitated parking options. Consumers’ level of overall willingness to purchase a bundle was altered based on the attributes that made up that bundle. The findings of this research confirm that the theory of bundling can be applied to arts marketing and provides support for the development of bundling strategies to enhance opera attendance.

Research limitations/implications

It is recognised that the research needs to be tested in different countries in order to know the extent to which the findings of this study can be generalised. Additionally, future research could use other statistical methods such as regression and structural equation modelling to holistically model behaviour. Finally, as well as testing customer-stated intentions, the model also needs to be tested with actual patronage behaviour following the development and application of bundling strategies. Future research could also consider how bundling and other aspects relating to opera attendance could be used as part of the branding strategy associated with opera attendance; in particular how to develop, increase and maintain loyalty and therefore brand resonance in opera attendees.

Practical implications

The findings have useful implications for event organisers and policymakers and suggest bundling strategies that could be utilised. It is has been found that loyalty can be enhanced by adding value and ensuring satisfaction, and therefore, increase the likelihood of sales and repeat purchase.

Social implications

Opera represents a significant cultural heritage and is a valuable component of the performing arts, both historically and currently. Opera is a form of art whose survival is threatened by an increasingly diminished audience whose average age is steadily increasing. This decrease in audience attendance has led to radical changes in the management and marketing of opera houses, where theaters have moved increasingly towards a business-oriented model where improved branding and bundling strategies can be utilised.

Originality/value

This makes a theoretical contribution by advancing performing arts research and furthering the notion that bundling can increase the likelihood of opera attendance, satisfaction, ongoing loyalty, and also addresses a managerial need of an arts marketing organisation.

Details

Arts and the Market, vol. 6 no. 2
Type: Research Article
ISSN: 2056-4945

Keywords

Article
Publication date: 31 July 2008

Nusser Raajpoot, Rubina Javed and Khoon Koh

The purpose of this paper is to introduce the concept of robust design in retail service literature.

Abstract

Purpose

The purpose of this paper is to introduce the concept of robust design in retail service literature.

Design/methodology/approach

Using a Taguchi design comprising of inner L8 (27) and outer 22 arrays, a discrete choice task was designed for 233 students respond to. Signal‐to‐noise (S/N) ratio was used to test design robustness.

Findings

Negative effects of uncontrollable design factors on service choice were minimized through the use of inner and outer Taguchi arrays. The single composite measure of consumer choice called S/N ratio accounted both for mean and variance of choice probabilities.

Research limitations/implications

Use of student sample was a major limitation. Also, the interaction between design factors was not tested as it required the use of more complicated designs.

Practical implications

This method can be used to improve design robustness by minimizing the impact of uncontrollable noise factors. Use of S/N ratio can help to select the design that simultaneously maximized the choice probabilities and minimized performance variation.

Originality/value

The paper makes important methodological and operational contributions to the retail service design literature. First, the concept of controllable and uncontrollable factors in choice‐based designs is introduced. Second, the use of S/N ratio as a single, composite measure of design robustness was incorporated. Operationally, this study highlights the impact of less‐studied concepts of wayfinding and customer incompatibility on satisfaction of retail customers.

Details

International Journal of Commerce and Management, vol. 18 no. 2
Type: Research Article
ISSN: 1056-9219

Keywords

Article
Publication date: 1 September 1999

Rohit Verma and Gary M. Thompson

This article presents the results of a study using discrete choice analysis (DCA) in the dine‐in pizza industry. DCA offers an effective approach for incorporating…

3541

Abstract

This article presents the results of a study using discrete choice analysis (DCA) in the dine‐in pizza industry. DCA offers an effective approach for incorporating customer preferences into operating decisions in service businesses. Our results show how customers tradeoff among several determinant attributes (e.g. price, waiting time, quality) when choosing a dine‐in pizza restaurant. The article also offers evidence that managers’ perceptions of customer choice patterns are not the same as customers’ actual choice patterns for the businesses we examined. Finally, we show how our results can be easily incorporated into a decision support system for structuring service operations according to customer preferences.

Details

International Journal of Operations & Production Management, vol. 19 no. 9
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 31 January 2022

Youwei Yang, Wenjun Long and Calum G. Turvey

This paper investigates Chinese agricultural insurance agents willingness to offer (WTO) livestock insurance based on the variations of eight main attributes of livestock…

Abstract

Purpose

This paper investigates Chinese agricultural insurance agents willingness to offer (WTO) livestock insurance based on the variations of eight main attributes of livestock insurance.

Design/methodology/approach

This study implements discrete choice experiments (DCE) with actual insurance agents who design, sell and operate livestock insurance in China. The choice experiment of this study is based on the D-optimal approach, a six-block design, with 15 cards per block and two choices per card. The sample size was 211. Econometrics results are based on conditional and mixed logit models.

Findings

The authors find that the subsidy effect is enormous; a one level increase of subsidy leads to 3.166 times higher probability to offer. This subsidy effect is important as it confirms the endogenous structure between price and quantity in insurance offering, where subsidy does not only incentivize demand but also the supply. Another main factor of insurance investigated is the impact of different coverage types on agents' WTO. The authors find that agents prefer mortality insurance the most, followed by revenue insurance and profit insurance, while Index-Based Livestock Insurance (IBLI) is the least preferred to offer. Agents' knowledge about these newer types of insurance supports their WTO as well; thus, proper education is necessary to promote the more advanced types of livestock insurance.

Research limitations/implications

A limitation is that in the presence of COVID 19, and administrative issues at the local level, the sample was not randomly drawn. Nonetheless, the authors believe that there is enough diversity across participants, insurers and provinces and have done sufficient robustness checks to support results and conclusions.

Practical implications

This study provides further validation for the DCE research method that could potentially be applied to different analyses: using choice experiments to study insurers and reveal their preferences, through combinations of various levels of core attributes for insurance products. The findings and contribution are critical to the reform and improvement of livestock insurance in China and for insurance markets more broadly. The authors find that insurers do not place equal weights or values on insurance product attributes and do not view types of insurance equally. In other words, while farmers may hold different preferences about the type of insurance they demand, the results suggest that insurers also hold preferences in the type of insurance they sell.

Originality/value

So far as the authors are aware, this is the first DCE designed around the supply of insurance products with the subjects being insurance agents, marketers and executives.

Details

Agricultural Finance Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 21 November 2016

Pierre Desmet

Questionnaire measures of consumers’ willingness to pay (WTP) and price sensitivity are biased, yet these declarative methods can aid managerial decision-making…

Abstract

Purpose

Questionnaire measures of consumers’ willingness to pay (WTP) and price sensitivity are biased, yet these declarative methods can aid managerial decision-making. Additional choices involve which question formats to use (open-ended or discrete choice) and how many questions (unique versus multiple). This paper aims to inform such choices for online data collection with an empirical evaluation of the size of the bias induced by four methods (price acceptability, price judgements, multiple discrete choices and single discrete choices) in a realistic choice context.

Design/methodology/approach

An experimental framework collects online data about a staple product whose price should be well known. Price sensitivity, WTP and their confidence intervals are derived from a logistic binary model of acceptability, then ranked to evaluate the size of the bias of each method, relative to an indirect benchmark.

Findings

Online data collections with self-administrated questionnaires lower respondents’ involvement and create substantial bias; hypothetical methods overestimate WTP and underestimate price sensitivity, especially with methods using unique questions (both discrete choice and price acceptability). Multiple questions (price judgements and repeated random discrete choices) increase attention to price information and reduce the bias. The round price effect also is notable in data collected by open-ended methods.

Practical implications

To measure declarative WTP and price sensitivity with online data collections, researchers should use a random discrete choices method. Price acceptability questions and split tests are not recommended. Price judgements provide reliable information about consumer reactions to prices, but the strong round price bias is problematic.

Originality/value

This study adds to marketing and economic literature by comparing actual measurement methods used by firms, rather than hypothetical versions, and offers strong external validity.

Details

Journal of Product & Brand Management, vol. 25 no. 7
Type: Research Article
ISSN: 1061-0421

Keywords

Article
Publication date: 24 September 2018

Carola Grebitus and Jutta Roosen

The purpose of this research is to test how varying the numbers of attributes and alternatives affects the use of heuristics and selective information processing in…

Abstract

Purpose

The purpose of this research is to test how varying the numbers of attributes and alternatives affects the use of heuristics and selective information processing in discrete choice experiments (DCEs). The effects of visual attribute and alternative non-attendance (NA) on respondent choices are analyzed.

Design/methodology/approach

Two laboratory experiments that combined eye tracking and DCEs were conducted with 109 and 117 participants in the USA. The DCEs varied in task complexity by the number of product attributes and alternatives.

Findings

Results suggest that participants ignore both single attributes and entire alternatives. Increasing the number of alternatives significantly increased attribute NA. Including NA in choice modeling influenced results more in more complex DCEs.

Research limitations/implications

The current experiments did not test for choice overload. Future studies could investigate more complex designs. The choice environment affects decision-making. Future research could compare laboratory and field experiments.

Practical implications

Private and public sectors often use DCEs to determine consumer preference. Results suggest that DCEs with two alternatives are superior to DCEs with four alternatives because NA was lower in the two-alternative design.

Originality/value

This empirical research examined effects of attribute and alternative NA on choice modeling using eye tracking and DCEs with varying degrees of task complexity. Results suggest that accounting for NA reduces the risk of over- or understating the impact of attributes on choice, in that one avoids claiming significance for attributes that might not truly be preferred, and vice versa.

Details

European Journal of Marketing, vol. 52 no. 9/10
Type: Research Article
ISSN: 0309-0566

Keywords

1 – 10 of over 5000