Modeling Multimodal Consumer Heterogeneity in Conjoint Analysis – A Sparse Learning Approach

56 Pages Posted: 21 Nov 2013

See all articles by Yupeng Chen

Yupeng Chen

University of Pennsylvania - Marketing Department

Raghuram Iyengar

University of Pennsylvania - Marketing Department

Garud Iyengar

Columbia University - Department of Industrial Engineering and Operations Research (IEOR)

Date Written: July 19, 2013

Abstract

A realistic specification for consumer heterogeneity should allow for both multiple market segments and within-segment heterogeneity. Such a flexible heterogeneity specification, which we term as multimodal consumer heterogeneity (MCH), raises considerable modeling challenge. We propose an innovative sparse learning approach for modeling MCH and apply it to conjoint analysis, where an adequate modeling of consumer heterogeneity is critical. The unique perspective of our approach is to characterize MCH via a special form of structured sparsity defined on conjoint partworths that can be recovered efficiently using recently developed optimization techniques. The proposed approach is intuitive and easy to implement in practice. We use extensive simulation experiments and two empirical conjoint data sets to demonstrate the performance of our sparse learning approach in modeling MCH and recovering both accurate individual-level partworths estimates and managerially relevant market segmentations.

Keywords: Sparse Learning, Multimodal Consumer Heterogeneity, Conjoint Analysis, Econometric Models

Suggested Citation

Chen, Yupeng and Iyengar, Raghuram and Iyengar, Garud, Modeling Multimodal Consumer Heterogeneity in Conjoint Analysis – A Sparse Learning Approach (July 19, 2013). Available at SSRN: https://ssrn.com/abstract=2357169 or http://dx.doi.org/10.2139/ssrn.2357169

Yupeng Chen (Contact Author)

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Raghuram Iyengar

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Garud Iyengar

Columbia University - Department of Industrial Engineering and Operations Research (IEOR) ( email )

331 S.W. Mudd Building
500 West 120th Street
New York, NY 10027
United States
+1 212-854-4594 (Phone)
+1 212-854-8103 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
92
Abstract Views
627
rank
278,198
PlumX Metrics