Structural Demand (Discrete Choice)

Structural Demand (Discrete Choice)

Understand customer choice architecture and willingness-to-pay using BLP / Mixed Logit models.

Live Report Preview

Interact with the mock decision board below.

Substitution Heatmap (Cannibalization Matrix)
Share vs Price Curves (by Segment)
Willingness-to-Pay (WTP) Density
Price Waterfall (Global)
Counterfactual Simulator (+5% Price)

Methodology & Governance

Transparent assumptions for CFO auditability.

Core Assumptions

  • Consumers maximize utility (rational choice)
  • Product characteristics are exogenous
  • Market is in temporary equilibrium

Data Requirements

  • Transactions2.5M
  • SKUs145
  • Time RangeJan 2023 - Present
  • Competitor CoverageHigh (85% Mkt)

Key Features

PriceDiscount DepthSeasonalityCompetitor Price IndexProduct Attributes (Size, Color)

Watchlist (Failure Modes)

  • New competitor entry (structural break)
  • Major supply shock limiting availability

Model Specification & Diagnostics

Utility / Model Equation

U_{ijt} = \alpha_i + \beta_i P_{jt} + \gamma X_{jt} + \xi_{jt} + \epsilon_{ijt}

Identification Strategy

Relies on variation in 'Promo Depth' and 'Competitor Stockouts' to separate supply/demand.

Diagnostics Report

IIA / Nesting Test
Passed (p < 0.01)
Instrument Strength (F-stat)
24.5
Competitor Coverage
High

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