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The use of subgroups based on biological-clinical and socio-demographic variables to deal with population heterogeneity is well-established in public policy. The use of subgroups based on preferences is rare, except when religion based, and controversial.  If  it were decided to treat subgroup preferences as valid determinants of public policy, a transparent analytical procedure is needed. In this proof of method study we show how public preferences  could  be incorporated into policy decisions in a way that respects both the multi-criterial nature of those decisions, and the heterogeneity of the population in relation to the importance assigned to relevant criteria. It involves combining Cluster Analysis (CA), to generate the subgroup sets of preferences, with Multi-Criteria Decision Analysis (MCDA), to provide the policy framework into which the clustered preferences are entered. We employ three techniques of CA to demonstrate that not only do different techniques produce different clusters, but that choosing among techniques (as well as developing the MCDA structure) is an important task to be undertaken in implementing the approach outlined in any specific policy context. Data for the illustrative, not substantive, application are from a Randomized Controlled Trial of online decision aids for Australian men aged 40-69 years considering Prostate-specific Antigen testing for prostate cancer.  We show that such analyses can provide policy-makers with insights into the criterion-specific needs of different subgroups. Implementing CA and MCDA in combination to assist in the development of policies on important health and community issues such as drug coverage, reimbursement, and screening programs, poses major challenges -conceptual, methodological, ethical-political, and practical - but most are exposed by the techniques, not created by them.   Electronic supplementary material  The online version of this article (doi:10.1186/s13561-015-0048-4) contains supplementary material, which is available to authorized users.

Addressing preference heterogeneity in public health policy by combining Cluster Analysis and Multi-Criteria Decision Analysis: Proof of Method