Mapping Consumers’ Context-Dependent Consumption Preferences: A Multidimensional Unfolding Approach[An Empirical Comparison of Logit Choice Models with Discrete versus Continuous Representations of Heterogeneity]

How, and to what extent, consumer choices are influenced by the context in which the product is consumed remain important marketing questions. In this article, the authors develop a parsimonious context-dependent multidimensional unfolding model that can accommodate consumers’ context-specific behaviors via ideal points in multiattribute space along with brand locations in that space while accounting for unobserved heterogeneity in consumer behavior. The authors provide an empirical illustration using panel data on beer brand choices in different contexts from U.S. beer consumers. They find more heterogeneity in behavior across social versus nonsocial contexts than across in-home and out-of-home consumption. The authors then show how the model can be used to derive a firm’s optimal direction of brand repositioning given its competitive landscape in the various consumption contexts. Since consumer preferences can be correlated across contexts, they show that a movement toward the ideal point in one context does not necessarily improve the firm’s market competitiveness in other contexts; thereby hurting the brand’s overall performance.