Pushing new boundaries of market research

AUTHOR: Lachlan Colquhoun   DATE: 13.04.06   ISSUE 1, 2006
The first space tourists have gone where no tourist has gone before, so space tourism was an appropriate subject for AGSM’s Professor Timothy Devinney and a team of researchers to demonstrate their groundbreaking choice-based market research techniques.

Professor Devinney, the director of AGSM’s Centre for Corporate Change, has combined with a group of academics including Professor Jordan Louviere from the Centre for the Study of Choice at UTS and Dr. Tim Coltman of the University of Wollongong with the survey instrument developed and hosted by Future and Simple as part of the Future Choice Initiative, which applies advanced research techniques to individual choice behaviour.

After successful projects with corporations such as Westpac and Motorola, and practical projects such as modelling the future design of mobile telephones and PDA devices, Professors Devinney and Louviere joined with Professor Geoffrey Crouch of La Trobe University to examine the area of space tourism for a major demonstration of their choice modelling methodologies and technology platform.

The space tourism report is the culmination of several years of technical development by The Future Choice Initiative team.

Illustration: Gregory Baldwin

Joining with leading figures from the incipient space tourism industry, including former astronaut Buzz Aldrin and operators from firms such as Starchaser and Space Adventures, the result is the report entitled “Going Where No Tourist Has Gone Before.”

The study collected survey data from 783 people who took part in an online panel operated by PureProfile in 2005.

The resulting report not only analyses the likely future demand for different kinds of space tourism, but it serves as a example of the depth of work possible with the Future Choice Initiative and how it can apply to any number of other situations.

“The nice thing about this project is that unlike some of the other things we’ve done the research doesn’t belong to any proprietary group, so now we can go and say here is a really good example of the types of things we can study and how we can study them,” says Professor Devinney.

“Our methodology has been very accurate in predicting things like demand for other near term technologies like mobile phones and PDA’s, and our underlining technology is now well developed around choice theory or discrete choice modelling.”

“Our methodology has been very accurate in predicting things like demand for other near term technologies like mobile phones and PDA’s."
Photo: Professor Timothy Devinney

The space tourism report is the culmination of several years of technical development by The Future Choice Initiative team. Their methodology is a significant advance on current market research techniques in its use of discrete choice modelling – which recognises the various factors which go into a consumer’s decision – and information acceleration, which, in the example of space tourism, attempted to put the survey respondents not in a 2006 context – with mass space tourism still a pipedream – but in a future context where space tourism was much more realistic and likely.

"You can use this technology on applications that are not even technology related."

“If you think about discrete choice modelling in relation to a product such as an athletic shoe, the modelling recognises that the product is made up of a lot of parts, some of them functional and some of them emotional,” says Professor Devinney.“There are components such as price, colour and brand, and with this technique you are presenting different combinations of the product using experimental design techniques.”

Information acceleration, he says, is particularly useful in examples such as space tourism, where people have little understanding of the possible alternatives or what the product entails. In this case, the experiment involved exposing the study respondents to information from hypothetical space tourism operators and texts written to assume that the era of space tourism has already arrived, and is not some way in the future.

“Information acceleration puts people into the kind of information state they would be in if they were in an environment where space tourism was more feasible, and where the components are understood by the consumer in exactly the same way,” says Professor Devinney.

As the study says, much of the research up until now on the demand for space tourism has “largely focussed on price and price sensitivity, and it has done so in unrealistic environments where it is uncertain what space tourism experiences will actually entail.”

“Although price is an obviously important factor in a consumer’s decision, it is also important to recognise that the demand for space tourism will be a function of all the other factors that make up the experience, such as: journey duration; conditions aboard the spacecraft; available activities/experiences before, during and after the flight; perceived levels of safety,” the study says.

“So, demand must be estimated as a function of the price of various options, their risk, the competitive dynamics between the various ventures and different forms of space tourism, the characteristics and design attributes of different options available as well as situational factors.

“It also needs to take into account information that consumers have about exactly what is involved in a space tourism experience, and it needs to be able to profile who is likely to choose what (when, and how often).”

The result was a “nested choice experiment” where context – such as the availability of options such as high altitude, zero-gravity flights or sub-orbital or orbital flights – and information preceded the choices.

"You can study things you never thought you could study, and do them quickly and cheaply."

The experiment was delivered in three parts – an information section outlining different forms of space tourism, two decision sections containing eight sets of three hypothetical space tourism products in two different scenarios, and thirdly a number of demographic and lifestyle questions aimed at understanding “thrill seeking tendencies.”

From this process, the study arrived at a number of general findings, including:

-that at a price of US$50,000, around 20 percent of people would opt for a sub-orbital space flight. Above US$200,000 this number was halved to 10 percent.
-the vertical rocket is the preferred mode, with a rocket plane the least preferred.
-Potential consumers prefer American and Australian operators to those from Japan, Germany, the UK and Russia.
-Additional add-ons, such as talks by astronauts and scientists, or related touristic activities and training had little or negative value.

Although the study makes a significant contribution to understanding potential future demand for space tourism, Professor Devinney makes the wider point that the study has “ramifications” for other areas of market research.

“You can use this technology on applications that are not even technology related, such as a survey of racism, or as a mechanism to develop a collective bargaining agreement, or even things as bizarre as space tourism,” he says.

“This study was put together to illustrate the versatility of what we have done, and now we are going out and saying here it is, you can use this in any number of applications. You can study things you never thought you could study, and do them quickly and cheaply.”