Economic Valuation of Product Features

Greg M. Allenby, Professor and Helen C. Kurtz Chair in Marketing at The Ohio State University's Fisher College of Business, will present on October 28th in Room 105 of the Agricultural Administration Building (2120 Fyffe Road) as part of the AEDE Applied Economics Seminar Series. His presentation will focus on his recent research with Jeff Brazell from The Modellers, John R. Howell from the Smeal College of Business at Pennsylvania State University, and Peter E. Rossi from the Anderson School of Management at UCLA: "Economic Valuation of Product Features".

Abstract: We develop a market-based paradigm to value the enhancement or addition of features to a product. We define the market value of a product or feature enhancement as the change in the equilibrium profits that would prevail with and without the enhancement. Conjoint data can be used to construct the demand system necessary to compute equilibrium prices but assumptions about competitive offerings and cost are required as well. We contrast our approach to the frequent practice of computing what we call pseudo-WTP (willingness to pay) and show that pseudo-WTP may greatly over-estimate the value of a feature. We illustrate our methods using a survey of digital camera owners.

This event is open to the public and RSVPs are not required. If you have any questions, please contact us.