Does your Decision Tree mean what you think it means?
“You keep using that word. I do not think it means what you think it means.” Inigo Montoya, The Princess Bride
Is your Decision Tree misleading you? It’s not “inconceivable.”
There are several different approaches to Decision Trees and even more names for them: Is a CDT a Consumer Decision Tree or a Category Decision Tree? Or is it really a Shopper Decision Tree or a Purchase Decision Hierarchy? And remind me, how is that different from a Market Structure? The issue is not necessarily in the terminology, but rather in the interpretation.
Most people in our line of work think they know it when they see it. It looks like an organizational chart, or to be more scholarly, a dendrogram, where the boxes represent product qualities or attributes (type, brand, flavor, size, price tier, etc.). Many think the boxes on top are more important than the boxes below; however, importance is not a useful term as it needs to be further defined to be useful.
SUBSTITUTABILITY
If you purchased your Decision Tree from one of the big panel or loyalty card data-providers, then chances are good that your Decision Tree is measuring relative degrees of substitutability. Starting at the top the boxes represent product characteristics that are least substitutable; stepping downward the boxes represent product characteristics that are more and more substitutable.
We believe this analytic framework is highly useful, and we deliver it to help our clients with category assortment strategies, portfolio optimization, and innovation opportunities. Unfortunately, we think the common term Consumer Decision Tree is unintentionally misleading as it implies that the results illustrate a decision-making process that is entirely unsupported by the underlying methodology. We prefer the term Category Demand Structure as the framework structures a complex category into a series of discrete product consideration sets where demand is more transferable.
NAVIGATION
Now, if you purchased your Decision Tree from an in-store shopper research company, then chances are good that your Decision Tree is designed to measure sequential navigation through the choices offered in a complex category. The results are usually depicted in the same format of an organizational chart, but the meaning is distinctly different: the boxes at the top represent how the shopper orients to the category and stepping downward reveals the most common navigation path.
We believe this framework is also useful, and we deliver it to help our clients with communication, shopper marketing, aisle and shelf arrangement, and online architecture. In this case the term Decision Tree is better fitting, but because that term has been so thoroughly misused, we prefer the term Purchase Decision Hierarchy.
Vista Grande’s Category Choice Architecture® engagement delivers both Category Demand Structures AND Purchase Decision Hierarchies. Based on a meta-analysis of studies from a wide range of categories, we know that substitutability is not necessarily a proxy for navigation. One result we’ve found repeatedly is the way the Organic characteristic breaks in food and beverage categories: it often breaks out high on the Category Demand Structure but low on the Purchase Decision Hierarchy. The implication is that organic products may offer high incrementality but may not be a sound principle for aisle arrangement.
So, does YOUR Decision Tree mean what you think it means? If you’re not sure, we at Vista Grande would be delighted to help you.
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