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PIE: A Holistic Preference Concept and Measurement Model

49 Pages Posted: 16 Sep 2010 Last revised: 27 Dec 2013

Hye-jin Kim

Korea Advanced Institute of Science and Technology (KAIST)

Young-Hoon Park

Cornell University - Samuel Curtis Johnson Graduate School of Management

Eric Bradlow

University of Pennsylvania - Marketing Department

Min Ding

Pennsylvania State University - Department of Marketing

Date Written: December 27, 2013

Abstract

Extant preference measurement research, including conjoint analysis, is done in the isolation of one’s own mind. That is, it remains completely silent on the explicit influence of others in the formation of consumer preferences. This paper proposes a new holistic framework of preference, PIE, as well as a measurement method to remedy this problem. The new paradigm posits that consumers evaluate products based on different “needs” which are determined by three sources: (1) P, the physical attributes of the product; (2) I, the individual characteristics of the choice maker; and (3) E, characteristics of an external peer group. To provide an empirically feasible method to capture all three sources of information, we propose and test an incentive-aligned approach, a group-sourced mechanism, which mimics a real life consultation of a consumer making a purchase decision in the presence of her friends. Our results provide support for the PIE framework, including superior predictive performance in a conjoint task that is “stacked against it”. We also show how firms can apply the PIE framework for product design. Practitioners, however, must weigh carefully the benefits of the group-sourced preference measurement with the heavier cognitive burden on the respondents in completing the task.

Keywords: preference measurement, conjoint analysis, incentive alignment, mechanism design, new products

Suggested Citation

Kim, Hye-jin and Park, Young-Hoon and Bradlow, Eric and Ding, Min, PIE: A Holistic Preference Concept and Measurement Model (December 27, 2013). Johnson School Research Paper Series No. 33-2010. Available at SSRN: https://ssrn.com/abstract=1676770 or http://dx.doi.org/10.2139/ssrn.1676770

Hye-jin Kim (Contact Author)

Korea Advanced Institute of Science and Technology (KAIST) ( email )

373-1 Kusong-dong
Yuson-gu
Taejon 305-701, 130-722
Korea

Young-Hoon Park

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853-6201
United States
(607) 255-3217 (Phone)

Eric Bradlow

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-8255 (Phone)

Min Ding

Pennsylvania State University - Department of Marketing ( email )

University Park, PA 16802-3306
United States

HOME PAGE: http://www.planetding.org

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