Because choices seldom provide enough information to estimate utilities for each individual, CBC estimates average utilities for groups of respondents. However, if there are distinct segments, a model that recognizes them can produce more accurate results. Although one can conduct separate analyses for subgroups differing by demography or product-usage, it has been difficult to do segmentation based on choices themselves.
The CBC Latent Class Segmentation Module uses choice data for the simultaneous development of segments and estimation of utilities. For example, one segment might be composed of price-sensitive shoppers, and another might be composed of those who usually select premium brands. Each respondent has some probability of belonging to each segment, but can be classified into the most likely segment for subsequent tabulation.
This module has other features that may be of interest to CBC users: it permits weighting of respondents, and you can constrain utilities to be monotonic, such as for levels of price or quality. Choosing the number of segments is handled by specifying a range to investigate, such as from 1 through 10 segments. Statistics are provided for assessing goodness of fit for each solution, and alternative solutions are tabulated with one another.
The CBC Latent Class Segmentation Module will be available in November. It costs $1,000. As with all our products, it comes with a 60-day money-back guarantee.