February 15-18, 2009 Washington State Convention Center Seattle ...

A DISCRETE CHOICE EXPERIMENT TO UNDERSTAND THE PREFERENCES OF
AUSTRALIAN CONSUMERS IN BUYING PRAWNS
Dr Nick Danenberg, Dr Simone Mueller and Dr Hervé Remaud
Ehrenberg-Bass Institute for Marketing Science
University of South Australia
GPO Box 2471
Adelaide – SA – 5001 – Australia
nick.danenberg@unisa.edu.au
A Discrete Choice Experiment was conducted to survey and investigate the preferences of Australian consumers for prawns
(shrimp) in relation to various attributes. The attributes included for analysis were: price ($12.50-$32), region of origin (Australia,
Spencer Gulf (AUS), China and Thailand), method of production (farmed vs. wild caught), method of storage (fresh vs.
frozen), health claims (rich in Omega-3, low in fat, none), and sustainability claim. Respondents were presented choices in
a graphical format using the internet, which very closely simulated the real-life prawn retail purchase environment. A Latent
Class choice analysis was conducted, able to model consumer heterogeneity. This analysis is simultaneously estimating individuals’
attribute level part-worth, the relative importance of the selected product attributes and cluster membership based on
respondents’ preference data.
The study found that at the aggregate level, region of origin is the biggest driver for the purchase of prawns, representing over
60% of the consumer decision making process, followed by price at 20%. At the segment level, however, the cluster analysis
additionally revealed that there were five distinct, substantial groups of consumers. One such segment (30% of consumers)
valued low prices more than region; and another segment (9% of consumers) predominantly valued freshness. Contrary to the
elsewhere reported importance to consumers of the promotion of health benefits and environmental sustainability, this study
revealed that overwhelmingly, consumers did not place much value on either health or sustainability claims.
When trying to understand drivers of consumer purchase, marketers face a critical issue: consumers don’t necessarily do what
they say. Most market research methods employ direct questioning approaches, where consumers are asked (in different ways)
about what products or features they like. Choice Modeling, in particular, Discrete Choice Experiments (DCE), differs from
this in that it analyses consumers’ choices from controlled alternatives and thereby simulates the decision making process that
consumers apply in the real world.
Through having respondents repeatedly make choices, or trade-offs, in selecting one offering from a competitive set of close
alternatives, a DCE allows a researcher to determine the importance of given product attributes (or, features) and the favourability
of different levels on these attributes—e.g., ‘is low in fat, as a level of the attribute health claim favoured over rich in
Omega-3?’. DCEs have proven to provide valid predictions of real world sales of a very diverse range of products and services,
including food products.
We report on a survey conducted in early 2008 that analyzed Australian consumers’ choice behavior for prawns. An experimental
design was employed to construct the choice sets based on the attributes and levels stated above. The survey with 1,276
respondents was administered over the internet, which allowed for a realistic simulation of a characteristic retail environment
for prawn purchasing.
As the DCE reveals the underlying importance of attributes and the preference for attribute levels, these results can be used to
simulate a market with competing products, assuming that these only vary in the attributes controlled in the experiment. Such
a Decision Support System (DSS) predicts market shares of products with different characteristics. For instance, it can forecast
the market share of a regional Australian brand compared to national and imported brands if the producer is accredited ‘sustainable
fishery’ or uses a health claim such as ‘rich in omega-3’, and so on. Such a DSS allows the seafood industry to assess their
strategic options before introducing them into the real market.