Integrating latent variables in discrete choice models – How higher-order values and attitudes determine consumer choice

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, to date applications of ICLV models in marketing are still rare. The present study on travel mode choice clearly demonstrates the value of ICLV models to enhance understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonisms as well as attitudes such as a desire for flexibility impact on travel mode choice. Further, we can show that it is possible to estimate ICLV models with the widely available structural equation modeling package Mplus. This finding is likely to encourage wider usage of this appealing model class in the marketing field.Hybrid choice models; Mode choice; Values; Value-attitude hierarchy; Mplus

Das Hybride Wahlmodell und seine Anwendung im Marketing

Traditional choice models assume that observable behavior results from an unspecified evaluation process of the observed individual. When it comes to the revelation of this process mere choice models rapidly meet their boundaries, as psychological factors (e.g., consumers’ perception or attitudes towards products) are not directly measurable variables and therefore cannot offhand be integrated within the model structure. The causal-analytic approach offers the possibility to specify not directly measurable factors as latent variables, and can thus reasonable supplement choice models. So far, methodological approaches investigating latent variables, and traditional choice models are perceived and applied independently of one another. In this paper the possibilities of an integration of latent variables into traditional choice models is pointed out, and an introduction into the modeling of hybrid choice models is provided. Furthermore, potential areas of application in marketing research are outlined.Hybrid choice model, latent variables, causal model, choice model

Counselling in the introductory phase of studies

The University of Applied Sciences RheinMain has a heterogenic field of beginners, which leads to a high dropout rate after the first semester. We ran a project to change the engineering department’s introductory phase based on motor learning’s feedback concept. The beginners could choose to have one exam at the end of the semester or having three shorter exams instead during the semester. Failing one of the shorter exams made it mandatory to get individual counselling. The data from that project shows the effects of that counselling which helps the students to be successful in later exams. Students, who assume early support offers, are proven to perform better

A Brand Specific Investigation of International Cost Shock Threats on Price and Margin with a Manufacturer-Wholesaler-Retailer Model

In times of increasing oil prices and a weak dollar, European companies that focus their business on the US market may find themselves in a weak position. While many businesses can hedge this kind of risk by relocating production to the US, or employing financial remedies, these strategies may not work throughout the consumer goods industry. Especially for brands whose consumption is strongly impacted by country of origin (e.g. French whine, Swiss chocolate, German beer, etc.), there are only limited possibilities to bypass these challenges. To react efficiently to these threats, managers need a precise picture of complete market mechanisms before they can set up an appropriate marketing strategy to react. We aim to enhance the understanding of market mechanisms that are caused by exogenous cost shocks for typical consumer goods. The contribution of our work is twofold: To investigate the underlying process and to derive concrete managerial suggestions. We hereby propose a combination of two different empirical frameworks to measure the effects of exchange rate variations in fast moving consumer markets. Furthermore we extend existing work in being the first to model vertical interactions with a Manufacturer-Wholesaler-Retailer Model. Within this framework we investigate how changes in local currency affect the strategic management variables of price, margin and profit in a typical consumer goods market. While it is widely known that exchange rate changes cause variations in export/import prices and numerous studies show that the effect of currency fluctuations decreases within the distribution process, recent marketing research in this area has not explicitly accounted for the mechanisms that occur within the distribution channel. Many empirical studies implicate that exogenous cost shocks, which are caused by exchange rate changes, are passed through imperfectly to final consumer prices. We therefore show that the margins of the players involved in the distribution process will be affected differently by exchange rate variation dependent on the competitive situation. Although our empirical study focuses on the effect of exchange rate variations on strategic marketing variables of a selected fast moving consumer good, our framework can be easily adapted to any other market and other sources that cause a change in production cost

Integrating latent variables in discrete choice models

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, to date applications of ICLV models in marketing are still rare. The present study on travel mode choice clearly demonstrates the value of ICLV models to enhance understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonisms as well as attitudes such as a desire for flexibility impact on travel mode choice. Further, we can show that it is possible to estimate ICLV models with the widely available structural equation modeling package Mplus. This finding is likely to encourage wider usage of this appealing model class in the marketing field

Integrating latent variables in discrete choice models – How higher-order values and attitudes determine consumer choice

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, to date applications of ICLV models in marketing are still rare. The present study on travel mode choice clearly demonstrates the value of ICLV models to enhance understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonisms as well as attitudes such as a desire for flexibility impact on travel mode choice. Further, we can show that it is possible to estimate ICLV models with the widely available structural equation modeling package Mplus. This finding is likely to encourage wider usage of this appealing model class in the marketing field

Incorporating Latent Variables into Discrete Choice Models - A Simultaneous Estimation Approach Using SEM Software

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, applications of ICLV models in marketing remain rare. We extend previous ICLV applications by first estimating a multinomial choice model and, second, by estimating hierarchical relations between latent variables. An empirical study on travel mode choice clearly demonstrates the value of ICLV models to enhance the understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonism as well as attitudes such as a desire for flexibility impact on travel mode choice. Furthermore, we show that it is possible to estimate such a complex ICLV model with the widely available structural equation modeling package Mplus. This finding is likely to encourage more widespread application of this appealing model class in the marketing field

Das Hybride Wahlmodell und seine Anwendung im Marketing

Traditional choice models assume that observable behavior results from an unspecified evaluation process of the observed individual. When it comes to the revelation of this process mere choice models rapidly meet their boundaries, as psychological factors (e.g., consumers’ perception or attitudes towards products) are not directly measurable variables and therefore cannot offhand be integrated within the model structure. The causal-analytic approach offers the possibility to specify not directly measurable factors as latent variables, and can thus reasonably supplement choice models. So far, methodological approaches investigating latent variables, and traditional choice models are perceived and applied independently of one another. In this paper the possibilities of an integration of latent variables into traditional choice models is pointed out, and an introduction into the modeling of hybrid choice models is provided. Furthermore, potential areas of application in marketing research are outlined

Incorporating Latent Variables into Discrete Choice Models – A Simultaneous Estimation

Integrated choice and latent variable (ICLV) models represent a promising new class of models which merge classic choice models with the structural equation approach (SEM) for latent variables. Despite their conceptual appeal, applications of ICLV models in marketing remain rare. We extend previous ICLV applications by first estimating a multinomial choice model and, second, by estimating hierarchical relations between latent variables. An empirical study on travel mode choice clearly demonstrates the value of ICLV models to enhance the understanding of choice processes. In addition to the usually studied directly observable variables such as travel time, we show how abstract motivations such as power and hedonism as well as attitudes such as a desire for flexibility impact on travel mode choice. Furthermore, we show that it is possible to estimate such a complex ICLV model with the widely available structural equation modeling package Mplus. This finding is likely to encourage more widespread application of this appealing model class in the marketing field