A business model to identify what customers value about a product or service improvements
John Green, a market researcher who began life working for Xerox, developed the SIMALTO concept and presented it at a market research conference in Oslo in 1977. The tool found favour with business to business market researchers who have to deal with small and specialised samples. John Green subsequently became a consultant in the application of the tool.
SIMALTO is trade-off model that enables marketers to work out what people value and where they would like to see improvements. The name is an acronym for Simultaneous Multi-Attribute Level Trade-Off. This rather lengthy title describes how the tool works. Respondents are asked to look at a list of different attributes and rank them in order of importance. In this way they are simultaneously trading off a number of attributes that will influence their buying decision. Each of the attributes has different levels.
Respondents indicate the level of service they receive at the present and in following questions they say what level of service they would like to receive. Finally, they are given a number of points to spend across all the levels to indicate what they would like to be improved. This is the multi-level attribute trade-off in the SIMALTO title.
The SIMALTO tool can best be described with an example. In the grid below are a selection of attributes that were researched to determine how to improve the sales service of a company. The left-hand column lists attributes that could be considered important to the sals service. The figure shows, for purposes of illustration, 9 attributes out of many others that were covered. Each attribute has different levels of performance moving from very basic levels at the left of the row through to higher performance levels at the right. Respondents answered questions about what they receive at the present and what they would like to receive.
Each level in the row has a number from 0 to 15 which indicates a notional value that people might attach to a particular feature. Towards the end of the interview respondents are given (say) 50 points to spend and show how they would like to move from the current level of performance for an attribute to an improved sales level they have indicated they would like. The limited number of points they have to spend means they have to make trade-off choices, allocating the points to things they truly value.
The SIMALTO tool can be used with much smaller sample sizes than for conjoint. In theory a sample of just one respondent is possible with SIMALTO. The single respondent could complete the grid and the analyst could see what they are receiving now and what they would like to receive. This could be used as a discussion point in a depth interview. In practice, sample sizes are selected that cover a cross-section of different types of customers so that in the analysis it is possible to group respondents together with similar priorities and needs. In this way the SIMALTO results can be used to discover different segments.
The “points spend” question provides a utility value showing people's unmet needs and how much they are prepared to spend to satisfy them. The points spend can be converted to a dollar value as a guide to pricing.