Internship example: Menu-based Choice Modeling (MBC)

This internship example is relevant for master students in econometrics or engineering.

Applying Choice-Based Conjoint analysis (CBC) is one of our main expertise areas. Although CBC is still the preferred approach to model consumer choice behavior, it can be less appropriate to model the consumer’s willingness to pay for the features of big ticket items (e.g. the accessories of a new car). Also, CBC cannot describe behavior in purchase environments in which consumers can specify their desired product, such as the Dell website or when fetching your desired menu in a restaurant.

This points to the need for a class of consumer choice models known as menu-based choice modeling, which describe consumer behavior when assembling a product from a menu of options. The challenge is to model these choices properly and turn them into information that may help brands build their portfolio of options to offer. It helps brands understand consumer trade-offs when new options are introduced or when options cease to exist.

We have two assignments to choose from:

1. Generalizing restaurant choices – Imagine thousands of consumers having gone through the process of fetching their menu in a McDonald’s restaurant. On first sight, the analysis of choice data is straightforward. However, when analyzing the data and generalizing the insights to do recommendations for the optimization of options on the restaurant menu, it can become tricky, especially because of the existence of (higher-level) interaction effects. Your task is to develop a standardized approach for analyzing individual consumer choices and come up with an optimal set of options for McDonald’s types of menus at an optimal pricing.

2. Implementing a MBC-based approach to measure Willingness to Pay – We developed this approach to measure the consumer’s willingness to pay for features of big-ticket items and we have tested it using artificial data. It produced promising results, so now it is time to put the approach into practice. The assignment is to apply the approach in an actual research project, in which you will go through the practical steps of developing the survey and analyzing the results using the new approach.

Activities in the assignment include:

  • Describe the choice data studies using MBC may generate and describe how the data may be analyzed to solve the business problem of your assignment
  • Apply the approach described under your assignment either by means of a commercial study carried out for a client or an internal study conducted on SKIM’s behalf
  • Write a research paper and presentation about the results and present it to a client or at a conference