Hierarchical Choice Modeling

Posted in Marketing and Strategy Terms, Total Reads: 190
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Definition: Hierarchical Choice Modeling

Hierarchical Choice modelling is a method which is a statistical method to rate customer preference for different attributes in a product and it is used by companies for developing their product after rating these attributes and understanding customer preferences.


The hierarchical choice models produces a hierarchy/ranking of the attributes that is important for the customer while making a purchase decision hence this helps companies understand the needs of the consumer and serve them in a better way.


For example when developing a smartphone a company may have several features that it wants but there is a tradeoff in these features as the company also wants to cater these needs within the price range that customer is willing to pay. The company will use statistical method to rate these features in the smartphone like looks, screen size, weight, battery life, camera, processor etc. and try an understand which features are more important for the customer and accordingly work on the product.

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