The analysis of rank ordered preference data based on Bradley–Terry type models

In this article we propose an approach to study the effect of consumer-specific information on (complete) rank ordered preference data by means of Bradley–Terry type models. The main idea is to transform the ranking data into paired comparison data, which can be modelled within the Generalised Linear Model framework by means of a log–linear model for a corresponding contingency table. Therefore, standard software can be used to estimate model parameters and a goodness-of-fit can be assessed in the usual way. This approach allows to simultaneously estimate object-specific parameters which, in the marketing context, can be interpreted as attractions of the analysed objects, as well as subject–object interaction parameters that represent the effects of consumer-specific variables on the attractions. The interaction parameters offer a statistically motivated approach for customer segmentation and market targeting. The outlined methodology is applied to preference judgements within a local daily newspaper market. It is shown that certain socio-economic characteristics of the consumers have significant influences on their preference structures.