A New Bayesian Spatial Model for Brand Positioning
Journal of Modelling in Management, Forthcoming
45 Pages Posted: 22 Jun 2016
Date Written: 2016
Purpose: Joint space multidimensional scaling (MDS) maps are often utilized for positioning analyses and are estimated with survey data of consumer preferences, choices, considerations, intentions, etc. so as to provide a parsimonious spatial depiction of the competitive landscape. However, little attention has been given to the possibility that consumers may show heterogeneity in their information usage (e.g. Bettman et al., 1998) and the possible impact this may have on the corresponding estimated joint space maps. This paper address this important issue and proposes a new Bayesian Multidimensional Unfolding model for the analysis of two or three-way preference data. Our new MDS model explicitly accommodates dimensional selection and preference heterogeneity simultaneously in a unified framework.
Design/Methodology/Approach: This manuscript introduces a new Bayesian hierarchical spatial model with accompanying MCMC algorithm for estimation that explicitly places constraints on a set of scale parameters in such a way as to model a consumer to use or not use each latent dimension in forming their preferences, while at the same time permitting consumers to differentially weigh each utilized latent dimension. In this manner, both preference heterogeneity and dimensionality selection heterogeneity are modeled simultaneously.
Findings: The superiority of our model over existing spatial models is demonstrated in both the case of simulated data, where the structure of the data are known in advance, as well as in an empirical application/illustration relating to the positioning of digital cameras. In the empirical application/illustration, the policy implications of accounting for the presence of dimensionality selection heterogeneity is shown to be derived from the Bayesian spatial analyses conducted. The results demonstrate that a model that incorporates dimensionality selection heterogeneity outperforms models that cannot recognize that consumers may be selective in the product information that they choose to process. Such results also show that a marketing manager may encounter biased parameter estimates and distorted market structures if s/he ignores such dimensionality selection heterogeneity. The proposed Bayesian spatial model provides information regarding how individual consumers utilize each dimension, and how the relationship with behavioral variables can help marketers understand the underlying reasons for selective dimensional usage. Further, the proposed approach helps a marketing manager to identify major dimension(s) that could maximize the effect of a change of brand positioning, and thus identify potential opportunities/threats that existing multidimensional scaling methods cannot provide.
Originality/Value: To date, no existent spatial model utilized for brand positioning can accommodate the various forms of heterogeneity exhibited by real consumers mentioned above. The end result can be very inaccurate and biased portrayals of competitive market structure whose strategy implications may be wrong and non-optimal. Given the role of such spatial models in the classical Segmentation-Targeting-Positioning paradigm which forms the basis of all marketing strategy, the value of such research can be dramatic in many Marketing applications, as illustrated in the manuscript via analyses of both synthetic and actual data.
Keywords: Multidimensional Unfolding Model, Weighted Unfolding Model, Bayesian Dimension Selection
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