Driving for Gold: Ipsos and ICBC Win at Predicting 2010 License Plate Sales

When it comes to predicting sales success, Ipsos and ICBC have proven to be a gold medal winning team. As an official supporter of the 2010 Winter Games, ICBC wanted to find out how British Columbians would respond to commemorative license plates. This case study examines the strategy behind the remarkable success in predicting sales of the 2010 Winter Games license plates.

Proven Pricing Research

In April 2007, ICBC launched sales of the 2010 Winter Games license plates. In marketing the plates, ICBC adopted the recommended pricing strategy from an Ipsos Reid survey conducted in late 2005.

This survey predicted demand of 106,663 plates in the first full year of sales, at the initial purchase price of $35 and the renewal price of $25. This forecast proved remarkably accurate, with actual one year sales reaching 101,350 plates in April 2008.

Research Background

In late 2005, ICBC was interested in launching a new British Columbia license plate design to commemorate the 2010 Olympics. The intent was to offer British Columbian vehicle owners a cost-neutral (to ICBC) license plate, as had been offered in other host countries, with net proceeds going directly to support the Games.

ICBC commissioned Ipsos Reid to conduct an online survey among its online panel members residing in British Columbia to identify interest in the concept, the price elasticity of demand, and to forecast actual sales.

Online Panel Approach

An online methodology using a representative panel of British Columbia households was quickly identified as the most appropriate data collection approach for this research. This approach offered several advantages:

• Survey respondents could view the license plate images
• The project could be completed much more quickly than a mail-out or mall intercept alternative
• The pricing combinations could be explained more clearly in print than orally
• and, Ipsos Reid's household panel is large enough (20,000+ households in BC) and recruited with enough sampling rigour to ensure a representative sample of ICBC customers.

In total 1,282 online surveys were completed among a representative province-wide sample of panel members age 18+.

Questionnaire Design

After reviewing (and ranking) some initial design concepts and indicating their overall level of interest in the 2010 Winter Games license plate concept, survey respondents were informed there would be two different fees for the Winter Games license plates:

• An initial fee to acquire the license plates
• An annual fee to renew the license plates

The questionnaire then tested customer purchase intentions using a combination of initial and renewal fees. Each respondent was asked to provide their likelihood of purchase given six separate combinations of initial and renewal fees:

• The tested initial fee ranged from $35 to $125
• The tested annual fee ranged from $0 to $35

The actual question shown to respondents under each pricing scenario is shown below. Likelihood of purchase was captured using a 5 point scale ranging from "definitely would buy" to "definitely would not buy".

Q. How likely is it that you would buy the 2010 Winter Olympics license plates with the following fees? (Select One Response)

Initial Fee = $[INSERT]

Additional Annual Fee = $[INSERT]

• Definitely would buy
• Probably would buy
• Might or might not buy
• Probably would not buy
• Definitely would not buy
• Don't know/no opinion

Analysis: Forecasting Demand

A statistical model was developed to predict purchase intentions at any combination of initial fee (between $35 and $125) and annual fee (between $0 and $35).

The model had two key components:

• First, it estimated the percentage of respondents who would say they would "definitely", "probably", "maybe", "probably not", and "definitely not" purchase the plates at various fee combinations. This was done using Hierarchical Bayes (HB) regression.
• Second, the model translated "stated" purchase intentions into predicted "actual" purchase intentions using pre-determined conversion percentages developed in past Ipsos Reid research (e.g. 81% of "definite" buyers will actually purchase, 27% of "probable" buyers will actually purchase, etc.).

These purchase intentions were then projected to the entire population of ICBC policy holders across British Columbia.

Research Partnership

Ipsos Reid enjoys an ongoing professional relationship with ICBC in which both parties co-research on a diverse range of studies. Ipsos Reid's proposal was successful because it emphasized our extensive pricing and online panel research expertise.

The key members of Ipsos Reid's team were Kyle Braid, Vice-President Public Affairs and Warren Vandale, Vice-President Marketing Services. At ICBC, the project was managed by Dr. Stephen Bath and Lori Sullivan.

Project Success

ICBC was delighted at the accuracy of the model. This study is set apart from others undertaken by ICBC because actual sales enabled them to tangibly measure the accuracy of the pricing model.