Accounting for discrepancies between online and offline product evaluations

Despite the growth of online retail, the majority of products are still sold offline, and the “touch-and-feel” aspect of physically examining a product before purchase remains important to many consumers. In this paper, we demonstrate that large discrepancies can exist between how consumers evaluate products when examining them “live” versus based on online descriptions, even for a relatively familiar product (messenger bags) and for utilitarian features. Therefore, the use of online evaluations in market research may result in inaccurate predictions and potentially suboptimal decisions by the firm. Because eliciting preferences by conducting large-scale offline market research is costly, we propose fusing data from a large online study with data from a smaller set of participants who complete both an online and an offline study. We demonstrate our approach using conjoint studies on two sets of participants. The group who completed both online and offline studies allows us to calibrate the relationship between online and offline partworths. To obtain reliable parameter estimates, we propose two statistical methods: a hierarchical Bayesian approach and a k-nearest-neighbors approach. We demonstrate that the proposed approach achieves better out-of-sample predictive performance on individual choices (up to 25% improvement), as well as aggregate market shares (up to 33% improvement).