An Application of the Multivariate Probit Model to Market Segmentation and Product Design

The tradeoffs among product attributes typically are estimated from data on preferences toward several product concepts. The “no-yes” data on intentions to buy a product concept in relation to a previously intended purchase of an existing brand are perhaps more useful for computing these tradeoffs. These measurement concepts are explored by means of the multivariate probit model, which is suited to the analysis of dichotomous data. Results of a pilot application indicate that procedures can be developed which will convert these data into probit coefficients applicable to each product attribute in the formation of market segments.