Brief Introduction to Switchable Consumer

The switchable consumer model is based on the notion that it is in-effective to go after all prospective customers that are out there. Some are intensely loyal to competing brands, and it will take more than an advertisement or sales pitch to get these consumers to consider your brand, let alone prefer or choose it. However, some prospective customers may prefer a particular brand, but their preference is less intense, they may be open to switching. But how do you know who these customers are, what they want, and where to find them?

That is where the switchable consumer approach comes in. In this approach, we derive individual brand-choice probabilities to understand and identify which customers have the highest probability to switch, stay, or are at-risk. For example, say a consumer has a 45% probability of choosing/prefer the brand that they stated in the survey they prefer. At the same time, the likelihood of this consumer to prefer a competing brand is 40%. Even though 40% is lower than 45%, the difference is not that big, and if we could make our brand a little bit more attractive, then this customer would switch to us. This is the power of the switchable consumer model.

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There are also consumers who have a high probability who prefer their brand, and a much lower probability to prefer our brand; we call this consumer the loyal consumer because they are not very likely to switch to our brand. Third, we have consumers who stated they prefer our brand, and the probability of preferring our brand over another brand is somewhat is not that high – similar to what we see with the switchable consumer, but has a probability to defect to another competing brand. We call this consumer the at-risk consumer, as this is a consumer who is most likely to defect. If we can identify which consumers are switchable and which are at risk, we can be much more targeted and efficient in our marketing.