Preference regression is a statistical technique used by marketers to determine consumers’ preferred core benefits. It usually supplements product positioning

Positioning (marketing)

In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization....

 techniques like multi dimensional scaling or factor analysis

Factor analysis

Factor analysis is a statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved, uncorrelated variables called factors. In other words, it is possible, for example, that variations in three or four observed variables...

 and is used to create ideal vectors on perceptual maps

Perceptual mapping

Perceptual mapping is a graphics technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition.Perceptual maps can have any...

.

Application

Starting with raw data from surveys, researchers apply positioning techniques to determine important dimensions and plot the position of competing products

Product (business)

In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

 on these dimensions. Next they regress

Regression analysis

In statistics, regression analysis includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables...

 the survey data against the dimensions. The independent variables are the data collected in the survey. The dependent variable is the preference datum. Like all regression methods, the computer fits weights to best predict data. The resultant regression line is referred to as an ideal vector because the slope of the vector is the ratio of the preferences for the two dimensions.

If all the data is used in the regression, the program will derive a single equation and hence a single ideal vector. This tends to be a blunt instrument so researchers refine the process with cluster analysis

Cluster analysis (in marketing)

Cluster analysis is a class of statistical techniques that can be applied to data that exhibit “natural” groupings. Cluster analysis sorts through the raw data and groups them into clusters. A cluster is a group of relatively homogeneous cases or observations. Objects in a cluster are similar to...

. This creates clusters that reflect market segment

Market segment

Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function...

s. Separate preference regressions are then done on the data within each segment. This provides an ideal vector for each segment.

Alternative methods

Self-stated importance method is an alternative method in which direct survey data is used to determine the weightings rather than statistical imputations. A third method is conjoint analysis in which an additive method is used.

See also

• Marketing
  Marketing
  Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
  
  
• Product management
  Product management
  Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, or marketing of a product or products at all stages of the product lifecycle....
  
  
• Positioning (marketing)
  Positioning (marketing)
  In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization....
  
  
• Marketing research
  Marketing research
  Marketing research is "the function that links the consumer, customer, and public to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve...
  
  
• Perceptual mapping
  Perceptual mapping
  Perceptual mapping is a graphics technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition.Perceptual maps can have any...
  
  
• Multidimensional scaling
  Multidimensional scaling
  Multidimensional scaling is a set of related statistical techniques often used in information visualization for exploring similarities or dissimilarities in data. MDS is a special case of ordination. An MDS algorithm starts with a matrix of item–item similarities, then assigns a location to each...
  
  
• Factor analysis
  Factor analysis
  Factor analysis is a statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved, uncorrelated variables called factors. In other words, it is possible, for example, that variations in three or four observed variables...
  
  
• Linear discriminant analysis#Marketing
• Preference-rank translation
  Preference-rank translation
  Preference-rank translation is a mathematical technique used by marketers to convert stated preferences into purchase probabilities, that is, into an estimate of actual buying behaviour...