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Speaker:
Dr. Minki Kim
Assistant Professor of Marketing
KAIST College of Business
Korea Advanced Institute of Science and Technology

Marketers have long been interested in understanding how, and the extent to which, consumer choices may be influenced by the context in which the product is consumed. In this paper, we develop a parsimonious context-dependent multidimensional unfolding (CDMDU) model that can accommodate consumers’ context-specific ideal points in multi-attribute space along with brand locations in that space. The specification allows for unobserved heterogeneity via a normal distribution on attribute weights and a discrete distribution on brand locations and ideal points. The CDMDU model is flexible and reduces to a factor structure random coefficients brand choice model when there is only one consumption context. We also demonstrate how the CDMDU model can be used to derive a firm’s optimal direction of brand re-positioning given its competitive landscape in the various consumption contexts and provide an empirical illustration using panel data from consumers in the U.S. beer market. A key observation when repositioning a brand is that consumer preferences can be correlated across contexts; so a movement towards the ideal point in one particular context does not necessarily improve the firm’s market competitiveness in other consumption contexts and can therefore hurt its overall performance in the market.