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Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile (2019)

Chapter: CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS

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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
×
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
×
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Suggested Citation:"CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS." National Academies of Sciences, Engineering, and Medicine. 2019. Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25642.
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49 CHAPTER 7. LATENT CLASS CLUSTER ANALYSIS 7(A) INTRODUCTION AND STRUCTURE The potential markets for long-distance travel, (including air and auto) can be analyzed in terms of their demographic similarity, their geographic similarity, and their similarity in market preferences. Market segmentation is a key strategy in market research; it allows marketers to understand different motivations for market behavior by different segments. Chapter 7 of this Technical Appendix now summarizes the market segmentation process, presents the four groups revealed in the process, and the summarizes groups’ characteristics. 7(B) UNDERSTANDING LATENT CLASS CLUSTER ANALYSIS The behaviors, attitudes, and values of any given population are hugely variable. For the purposes of discussion and analysis, it is often useful to group a population into discrete categories that can be characterized and compared to one another. Many commonly used cluster analysis methods achieve this by using an a priori segmentation approach based on demographic variables like income, gender, or age; however, the goal of Latent Class Cluster (LCC) analysis is to identify groups based on latent variables like attitudes, preferences, values, or personality differences. For example, differences among individuals in their preference for air travel might be due in part to travelers’ household incomes; however, perhaps the differences are not driven by income at all but are instead driven more strongly by a particular set of attitudes toward, for example, privacy, the environment, or convenience when traveling. As a data-driven analysis method based on latent variables, LCC allows researchers to identify subgroups that are based on distinct psychological profiles as they relate to travel preferences—in this case, the preference for choosing the car or the plane as a mode for medium- to long-distance trips. LCC uses a “finite-mixture model” to identify unique groups. This model assumes that a population can be segmented into a finite number of groups—or classes—by “unmixing” the data to identify the number and characteristics of the populations, or latent classes. The result of this method is that—for each individual—the model assigns probabilities for membership in each class and groups individuals in such a manner that they share similar characteristics but are dissimilar from those in other groups. To find the most appropriate number of segments, which variables to include in the model, and model fit, standard statistical tests are applied. For instance, R2 is used as a guide to determine which variables should be retained in the LCC model, chi-square and bootstrapping are used to assess the model fit, and AIC/BIC are used as measures of parsimony. Once classes are defined, members of the classes can then be profiled by other variables. For example, researchers can see the income distribution of all classes and see whether high income is associated with a particular segment. Each of these classes represent “building blocks” of attitudes, values, and preferences, which might influence an individual’s propensity to choose an automobile or air travel for medium- or long-distance trips.

50 LATENT CLASS PREDICTIVE VARIABLES The research team’s modeling effort for this project started with approximately 50 attitudinal variables (“indicators”) used in the specification of the correct model. From then, the variables were narrowed down to a set predicted by the cluster model. As can be seen in Table 7-1, the indicator variables used in the final model developed for this analysis were all based on the predictive power of the LCC model on these variables (R2 above 10%). In LCC analysis, the R2 value indicates how well an indicator is explained by the model.

51 TABLE 7-1 INDICATOR VARIABLES AND VARIANCE EXPLAINED INDICATOR VARIABLES R2 If I had to go to <destination> anytime soon, I would take the car 57% The level of uncertainty associated with flying tends to make me choose the car 50% The basic idea of driving for more than a day is unpleasant 50% I would definitely consider taking the plane for a trip to <destination> 47% Taking a trip by air is less safe than taking that trip in my own car 43% The thought of driving for several days with family/friends is unpleasant 40% I would worry about personal safety or disturbing behavior if I went by plane 40% The level of uncertainty associated with a multiday auto trip tends to make me choose 39% Making a long-distance trip by car exposes me to less crime and disturbing behavior 39% If they had to go to <destination>, most people who are important in my life would 36% Needing my car at the destination end of the trip makes it more difficult to choose air 35% The airlines just don't go where I need to go 35% Compared to driving a car for this trip, I would be less tired and stressed if I took the 33% My friends and coworkers usually go by air when they travel to <destination> 33% When I have a choice, I would really prefer not to fly 32% Rather than owning a car, I would prefer to borrow, share, or rent a car just for when I 30% Dealing with the crowds of people at the airports is uncomfortable for me 29% There is something appealing about taking a long trip by car 29% For me, the process of going through airport security is stressful 24% If driverless cars were to become a reality, I would be less likely to travel by plane 21% I could deal with the schedules offered by the airline for this trip from my home to 18% At the airport of <destination>, there are good taxis, vans and buses to help me get to 18% Getting stuck in traffic congestion on a long trip is a big concern 18% Getting from my home to the airport is inconvenient 18% I feel I am less dependent on cars than my parents are/were 16% I feel really stressed when driving for a long time in congestion in and around big cities 15% Having people so close to me in an airline seat is unpleasant to me 15% I would estimate that the cost of taking this trip by plane would be more than the cost of 13% I would need the flexibility of a car once I arrive in <destination> 12% I need to drive a car to get where I need to go 10%

52 7(C) SEGMENT OVERVIEW A six-cluster solution provided the best model fit and made the most intuitive sense, but about (6% of respondents) did not fall into a logical and meaningful cluster. Thus, the discussion and description herein focus on the remaining five clusters. Figure 7-1 shows the relative size of these five segments. FIGURE 7-1: SEGMENT SIZES Note: Percentages do not add up to 100% because 6% of respondents did not fall into a logical cluster The following descriptions and characteristics of the segments are for illustrative purposes only and are probabilistic rather than deterministic. This means that the descriptions do not necessarily apply to all members of a cluster. For instance, even though the Ardent Plane Adherents segment contains a large portion of employed individuals, not all members of this segment are employed. Likewise, even though Devoted Car Adherents comprises a disproportionally sizeable percentage of respondents who chose a car for their trips in the past years, not all did. Ardent Plane Adherents The largest segment identified in the sample is Ardent Plane Adherents. This group of travelers includes many employed, high-earning, and single individuals with no children for whom being connected to their smartphone or laptop is of greater importance than access to their car. Ardent Plane Adherents report a high ratio of business (compared to leisure) trips. As a group that travels primarily alone for business, flying is second nature and the go-to mode for their travel

53 needs. As seasoned flyers, they are comfortable on the plane and “true believers” of air travel: They perceive it to be easy to get to and from the airport, are satisfied with the schedules offered by the airlines, and are not particularly concerned about safety or lack of privacy when flying. Their friends, family, and colleagues reinforce the preference for taking the plane, as it is also the go-to mode for their social circles. Along with this acceptance of air travel comes a deep-seated rejection of and aversion to traveling by car, which has few—if any—redeeming features for them: They hate traffic and congestion, find longer drives unpleasant, think that car travel is more exhausting than flying, and reject any idealistic notion that making a road trip with friends or family members might evoke in other people’s minds. Given their attitudes toward traveling by car and plane, it is not surprising that 100% of this group states that they would consider taking the plane for a future trip, and 0% would consider taking the car. Rational Air Travelers The second largest cluster, Rational Air Travelers, includes high earners, is almost evenly split between men and women, and tends to be of middle age with no children in the household. Rational Air Travelers are likely to travel alone and tend to be the primary decision-makers for their trips. As a group that does not need to accommodate wishes or needs of fellow travelers, their mode choice is clear: like Ardent Plane Adherents, they strongly prefer to take the plane over driving for their travel needs. Attitudinally, this group shares many views with the first cluster in that they perceive flying as safe, are familiar with it, are comfortable on the plane, and think that their travel needs are being met by airline schedules. However, Rational Air Travelers differ in important ways from Ardent Plane Adherents, most notably in that they lack the deep- seated aversion to the car. In fact, the opposite is true: They are the least likely out of all groups to agree that the idea of driving for several days with family friends is unpleasant and, unlike several other groups, they are also not particularly irritated by traffic congestion, either. Thus, this group does not reject driving or traveling by car in general terms—they just do not perceive it as a good option for this trip. That is, their preference for taking the plane is based on the pragmatic realization that taking the plane for medium- or long-distance trips is a more relaxing, faster choice. Ambivalent Adapters Ambivalent Adapters is the youngest, most diverse group among the identified groups. This segment has high employment rates but also the most minors in the household; they are caught between competing demands of balancing their work lives with their home lives. Perhaps as a result, they are the group most likely to adapt their mode choice to a situation, and they are the most likely to consider both the car and the plane. However, the choice between flying and driving can best be described as “picking the lesser of two evils,” as they perceive plenty of negatives with both modes. For instance, they perceive themselves to be less dependent on automobiles than their parents and have little emotional attachment to the car as they like the idea of borrowing, sharing, or renting a car rather than buying one. They also do not find day trips by car with friends and family particularly appealing and have a strong dislike for traffic congestion. Again, this is not to say that they are unabashed fans of air travel—quite the contrary: They worry about personal safety when flying, do not like going through security at the

54 airport, and dislike the lack of privacy on airplanes. The ambivalence about taking the car versus the plane is reflected in their actual mode choices over the past year: approximately 46% of all the trips they report were in a plane. This percentage is in the middle, between Devoted Plane Adherents (who took the plane for 76% of their trips) and Devoted Car Adherents (who only took 18% of their trips by plane). Rational Auto Travelers Rational Auto Travelers tend to drive rather than fly. Their choice is determined by the perceived advantages of driving and pragmatism rather than an aversion to flying. These individuals are not particularly bothered by the downsides of flying that other people associate with this mode. For instance, they are the least likely to be worried about security and disturbing behavior on a plane and do not particularly mind going through airport security or the crowds at the airport. However, the specific needs of their trip make the car the more logical choice. Rational Auto Travelers tend to travel with other people rather than alone, are the most likely to have a car available for their trips and think that they need the flexibility of a car at their destinations. In addition, they enjoy taking road trips with others and are the least likely to be bothered by traffic, all of which make driving the logical choice for their travel needs. Ardent Auto Adherents Ardent Auto Adherents are an older group of individuals on a fixed income; the group includes a high percentage of retirees and few currently employed individuals relative to the other groups. Their travel needs tend to center around longer trips with other people for leisure and the choice for how they get to their destination is clear to them: They cannot imagine living without a car, enjoy taking road trips with family members, and think that they need the car once at their destination. To them, taking the car is the only option because, unlike the Rational Auto Travelers, they have a strong aversion to flying and reject air travel: They hate going through security, do not like the crowds in airports, worry about their personal safety and disturbing behavior on plane, lament the lack of privacy on planes, and generally think that driving exposes them to less crime and disturbing behavior. 7(D) LATENT CLASS CLUSTER CHARACTERISTICS MATRIX Table 7-2 provides the latent class cluster characteristics in tabular format. The research team ranked responses and coded these to the colors shown in Figure 7-2. FIGURE 7-2: RANKING KEY Top ranked in row 2nd ranked 3rd or 4th ranked 5th ranked

55 TABLE 7-2: OVERVIEW CHARACTERISTICS OF LCCs CLUSTER ARDENT PLANE ADHERENTS RATIONAL AIR TRAVELERS AMBIVALENT ADAPTERS RATIONAL AUTO TRAVELERS ARDENT CAR ADHERENTS Cluster Size 28% 23% 18% 16% 8% Demo- graphics % Under 35 Years Old 21% 16% 25% 15% 7% % Living Alone 26% 20% 19% 14% 14% % Employed (Full or Part) 66% 64% 65% 51% 42% % Hispanic 3% 4% 5% 3% 1% % White 89% 92% 85% 91% 94% % HH Income $100,000 or more 49% 49% 40% 41% 28% % Female 60% 52% 51% 53% 54% % With Kids at Home 22% 21% 36% 24% 25% Trip Type % 4 or more nights 55% 56% 49% 53% 63% % Primary Decision Maker 66% 66% 62% 50% 53% % Traveled alone 39% 40% 27% 19% 16% % Car Availability for Trip 51% 59% 67% 81% 70% % Leisure trips (out of all trips within last year) 60% 70% 64% 73% 79% % Plane trips (out of all trips within last year) 76% 62% 46% 39% 18% % Can't Live without Smartphone 37% 30% 36% 25% 19% % Can't Live without Car 31% 41% 33% 49% 52% Key Attitudes There is something appealing about taking a long trip by car 14% 62% 61% 66% 92% Getting stuck in traffic congestion on a long trip is a big concern 77% 43% 72% 33% 47% The thought of driving for several days with family/friends is unpleasant 73% 6% 48% 14% 8% If I had to go to <destination> anytime soon, I would take the car 0% 10% 47% 81% 98% I would need the flexibility of a car once I arrive in <destination> 49% 60% 74% 82% 93% I feel I am less dependent on cars than my parents are/were 33% 25% 40% 12% 12% Making a long-distance trip by car exposes me to less crime and disturbing behavior than going by air 4% 5% 39% 12% 54% I would worry about personal safety or disturbing behavior if I went by plane 6% 5% 40% 4% 57% Having people so close to me in an airline seat is unpleasant to me 48% 34% 72% 40% 85% I could deal with the schedules offered by the airline for this trip from my home to <destination> 89% 87% 79% 47% 42% I would definitely consider taking the plane for a trip to <destination> 100% 97% 84% 37% 21% Affect Toward Modes Dislike Car and Driving? Yes No Yes No No Dislike Plane and Flying? No No Yes No Yes

56 7(E) SELECT ATTITUDES BY LATENT CLASS CLUSTER As can be seen in Figure 7-3, even though Ardent Plane Adherents and Rational Air Travelers share the propensity to travel by plane, they differ starkly in their attitudes toward driving: Ardent Plane Adherents are much more likely to think that longer drives are unpleasant (94%) or that they are stressed by traffic and congestion (77%), views that are not as widely shared among Rational Air Travelers. Ambivalent Adapters, even though they are much more likely to choose the car as a mode than Ardent Plane Adherents, do not like the idea of driving either (61%) and are also stressed in traffic (72%). As reasons for choosing the car, Ambivalent Adapters, Rational Auto Travelers, and Ardent Auto Adherents all cite the need for an automobile at the destination. Asked directly if they had to go anytime soon on a similar trip, 0% of Ardent Plane Adherents and 98% of Ardent Auto Adherents state that they would take the car. FIGURE 7-3: SELECT ATTITUDES ABOUT DRIVING AND TRAVEL BY CAR, BY LCC

57 As can be seen in Figure 7-4, Rational Auto Travelers and Ardent Auto Adherents differ strongly in their attitudes toward flying. Most Ardent Auto Adherents worry about personal safety on the plane (57%) and do not like having people sit so close to them (85%). These views are not as widely shared among Rational Auto Travelers, who also have a propensity to use the car but lack the dislike of flying found in Ardent Auto Adherents. The propensity to fly is also reflected in the mode choices of the social circle of groups, where Ardent Plane Adherents, Rational Air Travelers, and—to a lesser extent—Ambivalent Adapters report that people close to them would also choose the plane, whereas only 16% of Rational Auto Travelers and 31% of Ardent Auto Adherents agree with this statement. FIGURE 7-4: SELECT ATTITUDES ABOUT FLYING AND TRAVEL BY PLANE, BY LCC 7(F) CONCLUSIONS AND IMPLICATIONS Most respondents (52%) belong to LCCs that prefer air travel for their medium- and long- distance travel needs, compared to 24% who prefer taking the car. In general, this implies that airports have a competitive advantage over cars and are in a good position to serve the needs of the traveling population for medium- and long-distance trips. Twenty-eight percent of respondents are almost guaranteed air travelers; they do not perceive any redeeming factors of car travel. An additional 23% of respondents are strongly in favor of air travel even though they do not share the negative attitudes toward the car that characterize the first group. Independent of cluster membership, respondents prefer an airport simply because it is close to their home (82% overall). However, the preference for proximity does vary by cluster, as described below. 0 20 40 60 80 % I would worry about personal safety or disturbing behavior if I went by plane Having people so close to me in an airline seat is unpleasant to me If they had to go to , most people who are important in my life would choose the plane over the drive by car When I have a choice, I would really prefer not to fly 6% 48% 91% 11% 5% 34% 83% 13% 40% 72% 69% 43% 4% 40% 16% 25% 57% 85% 31% 82% Ardent Plane Adherents Rational Air Travelers Ambivalent Adapters Rational Car Travelers Ardent Car Adherents

58 ARDENT PLANE ADHERENTS AND RATIONAL AIR TRAVELERS The largest LCC (23% of respondents) consists of “true believers” of air travel. Airports probably need to do little to attract these individuals as customers since they are already on the plane and would be hard-pressed to even consider traveling by car. For instance, 0% of Ardent Plane Adherents say that they would travel by car for their reference trip. Similarly, Rational Air Travelers strongly prefer travel by plane but lack the hostility toward traveling by car that characterizes Ardent Plane Adherents. For these individuals, air travel just makes sense given the distance of their destination and their travel needs. Since both groups highly value connectivity and are more likely to travel alone (39% and 40%, respectively), providing reliable Wi-Fi at the airport is a common-sense measure that airports can take to keep these segments satisfied. AMBIVALENT ADAPTERS Ambivalent Adapters are inconsistent in their mode choice (45% took the plane and 55% took the car for their reference trip). This is perhaps because their trip and travel characteristics fall in between those respondents who prefer the plane and those who prefer to drive. For instance, they consider themselves to be generally less dependent on the car than their parents and are willing to share or borrow a car (rather than own it). In addition, 84% agree with the statement “I would definitely consider taking the plane for a trip to <destination>.” At the same time, their trips often consist of leisure (rather than business) travel and their overall party size tends to be slightly higher than that of the two clusters that prefer air travel (2.4 vs. 2.2 and 2.0), all of which makes the car a more logical mode choice. The good news for airports is that even though closeness to their home is important for most of these respondents, it is less so than for other clusters that often fly, meaning that comparatively more are willing to drive longer to their preferred airport. Specifically, 84% of Ardent Plane Adherents and Rational Air Travelers state it as a reason, while only 75% of Ambivalent Adapters claim the same. These preferences are mirrored in the actual distance of origin airports: For 82% of Ardent Plane Adherents and 81% of Rational Air Travelers the origin airport is the closest to their home zip code, but that percentage drops to 75% for Ambivalent Adapters. As a group that is most likely to vary their mode choice, attracting new customers might hinge on convincing these respondents that air travel is a better choice than driving. Increasing Air Travel Among Ambivalent Adapters While airports have relatively little control over many of the biggest barriers to air travel for this cluster (cost of flights, needing a car at their destination, and concerns about overnight stays and meals on trips), airports do have the ability to highlight certain airport-related aspects that are attractive to this segment. This group is especially sensitive to avoiding difficulties when traveling—more so than recreation or excitement. That is, a “successful” trip for them is one that avoids missed connections, traffic congestion, long security lines, crowded airports, and cramped seats. As a result, marketing messages that highlight avoiding the frustrations that can accompany air travel might be especially effective with this segment. For instance, to alleviate the concern about missed connections, new nonstop destinations from an airport could be highlighted in marketing materials. If wait times for security are shorter than at comparable

59 airports, or if seating arrangements in the terminal provide greater privacy, then this could also be pointed out. RATIONAL AUTO TRAVELERS Rational Auto Travelers are relative “low-maintenance” travelers who do not mind either driving or taking the plane. This is not to say that they do not have a mode preference—they have a strong preference to drive—but that preference is almost entirely based on their perception that they need a car at the destination and not on any negative attitudes toward flying. As a result, and under specific circumstances, these respondents might be persuaded to fly rather than drive. For instance, an attractive package deal that includes both a flight and rental car at their destination might resonate with these individuals and could make them consider air travel. ARDENT AUTO ADHERENTS The smallest of the identified clusters (8%), Ardent Auto Adherents, have attitudinal profiles (strong preference for traveling by car, coupled with a rejection of air travel) that make it unlikely that they will consider flying rather than driving. As a result, airports and airlines will experience difficulty attracting these travelers as their customers.

Next: CHAPTER 8. TRAVEL BEHAVIORS AND ATTITUDES TOWARD THE LONG-DISTANCE TRIP: RESULTS OF THE ACRP 2017 SURVEY »
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This technical appendix from the TRB Airport Cooperative Research Program, ACRP Web-Only Document 38: Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile, supplements ACRP Research Report 204: Air Demand in a Dynamic Competitive Context with the Automobile with more detailed documentation of the research effort, including greater technical detail on the analytical models created for the research and their application.

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