Forecasting is needed by all businesses. All request it, but looking into the future belongs to magic, not economics or science. How about simulating hypothetical scenarios based on hard facts? Let the customers make choices, observe that systematically, then skilfully model their decision making process. With proper knowledge of the way people decide, simulate the scenarios of your interest. What if I increase price, what if I launch a new product, what if the competitors copy my moves? The results are realistic and based on facts.
Methods of Regression (OLS, Logistic, etc.):
- Customer satisfaction / loyalty applications: estimate how important are different attributes in generating satisfaction and loyalty
- Strategic applications: what factors influence the decision to choose one brand or another; what drives high consumption / frequency in a given product category
Perceptual Maps (using correspondence, MDS, discriminant, factor analysis)
Translate complex positioning of brands from your customer mind onto a two-dimensional map on paper. Several options are possible, from simple mapping of brands to complex mapping of brands, customer segments, ideal brands for each segment. While the first will accurately describe the positioning of brands in your consumer’s mind, the latter concentrates all strategic directions for your company.
- Customer satisfaction / loyalty applications: estimate how important are different attributes in generating satisfaction and loyalty. Discriminant analysis offers superior results to regression, bivariate or multiple correlation, given a proper and efficient design.
- Strategic applications: with a combination of cluster, factor, and discriminant analysis you can transform a customer driven segmentation into a management instrument functional across the entire marketing part of the organisation (screen and qualify your customers, design targeted products, monitor sales and communication performance for each strategic line).
The diverse thinking and behaviour of your customers and prospects may well have simple explanations. Generally a few powerful levers can help you understand and therefore manage complex and apparently chaotic realities. Factor analysis is the most simple step towards the underlying levers of reality.