Enhancing Discrete Choice Demand Modeling for Decision-Based Design

Abstract

Our research is motivated by the need for developing an approach to demand modeling that is critical for assessing the profit a product can bring under the decision-based design framework. Even though demand modeling techniques exist in market research, little work exists on demand modeling that addresses the specific needs of engineering design, in particular, that facilitates engineering decision making. In this work, we enhance the use of discrete choice analysis to demand modeling in the context of decision-based design. The consideration of a hierarchy of product attributes is introduced to map customer desires to engineering design attributes related to engineering analyses. To improve the predictive capability of demand models, the Kano method is employed to provide econometric justification when selecting the shape of the customer utility function. A (passenger) vehicle engine case study, developed in collaboration with the market research firm, J. D. Power & Associates, and the Ford Motor Company, is used to demonstrate the proposed approaches.