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Choice experiment: Identifying “niche” versus “change-of-pace” brands
Albert C. Bemmaor, December 23, 2011
March 30, 2012
October 12, 2012
The use of the “REIBST2_vaa.xls” data file is restricted to the course MKGM31203 (Q1,
2012-2013) at ESSEC Business School.
“Niche” brands can be defined as brands that benefit from an abnormally high repeat rate whereas “change-of-pace” brands can be defined as brands with an abnormally low repeat rate for a given penetration level.
Key notions
Here are some basic notions you need be familiar with prior to carrying out this exercise:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

What a “variable” is.
What a mean (expected value) is and how to compute it;
What the notion of independence between two events means and how to test for it; What a correlation between two variables is and how to measure it;
What a market share is and how to interpret it;
What a penetration is and how to interpret it;
What the duplication between two brands is and how to interpret it.

Analysis as a scientific process
Analyzing data consists of a three-step procedure:
(i)

(ii)
(iii)

Defining expectations: What do you expect to find and why? If you have “no idea” about your expectations, you need to develop these ideas by discussing with colleagues, “experts”, reading textbooks and/or using other supporting material; Running the analysis;
Comparing your expectations with the findings. Do they match? Did you obtain any surprising result? If so, what are their implications for the practitioner? In summary, in order to obtain results, one does not (simply) “crunch” a data set. The scientific process that leads to findings comes from an interaction between expectations
(“theory”) versus results. Never take an isolated number for granted (i.e., as representing the “truth”), regardless of the sample size.

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