conjoint analysis 12345

8/3/2019 Conjoint Analysis 12345

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Conjoint Analysis


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INTRODUCTION

It is a Research technique devloped in 70s

Dictionary definition-- Conjoint: Joined together,combined.

Marketers catch-phrase-- Features CONsidered

JOINTly

To understand how people make choices .


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What is conjoint analysis

Conjoint analysis is a statistical technique used

in market research .

To determine BEST combination of limited

number of attributes of a product which willinfluence the customer


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How Does Conjoint Analysis Work?

We vary the product features (independent variables) to

build many (usually 12 or more) product concepts

We ask respondents to rate/rank those product concepts

(dependent variable)

Based on the respondents evaluations of the productconcepts, we figure out how much unique value (utility)

each of the features added


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Whats Good about Conjoint?

When respondents are forced to make difficult

tradeoffs, we learn what they truly value .

More realistic questions .

Powerful way of capturing what really drives

customers to buy one product over another .


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Conjoint Design

A product or service area is described in terms a

number of attributes & levels .

For eg. A product may have attributes as size,

speed, colour, price and so on..

So for attribute colour levels might be red , blue ,

green so on


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Types of Conjoint Analysis

1. Adaptive Conjoint AnalysisACA

2. Choice Based Conjoint Analysis- CBC

3. Discrete Choice Analysis

4. Full profile Conjoint Analysis


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Market Simulations

Make competitive market scenarios and predict

which products respondents would choose

Accumulate (aggregate) respondent predictions

to make Shares of Preference (some refer to

them as market shares)


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How to Learn What Customers

Want? Ask Direct Questions about preference:

What brand do you prefer? What Interest Rate would you like?

What Annual Fee would you like?

What Credit Limit would you like?

Answers often trivial and unenlightening (e.g.

respondents prefer low fees to high fees, higher

credit limits to low credit limits)


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Create Attribute List

Attributes assumed to be independent (Brand,

Speed, Color, Price, etc.)

Each attribute has varying degrees, or levels

Brand: Coke, Pepsi, Sprite

Speed: 5 pages per minute, 10 pages per minute Color: Red, Blue, Green, Black

Each level is assumed to be mutually exclusive of the

others (a product has one and only one level level of that

attribute)


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How do we proceed ???

Company A & Company B

Phone A Phone B

Weight 250 grams 150 grams

Battery Life 21 hours 10 hours

Price Rs 1500 Rs 2800

Utility value according to

weight


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Continued

Relative importance Now select

Phone A Phone B

Weight 250 grams

(15)

150 grams

(35)

Battery Life 21 hours

(15)

10 hours (10)

Price Rs 1500 (25) Rs 2800 (15)

Utility 55 60


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Using the results..

Knowing the values of the utility values of

each of the levels, but what we really want

to know is how our product/servicecompares to our competitors and how we

can best optimise the value we give to the

customer.


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. For a business making the choice of what to

change or improve thus comes down to

understanding the cost impact of making the

change balanced against the extra value to

the customer.

Would you get a better return spending

more on development to bring the weight of

the phone down, or would it be worthbringing the price down despite the lost

profit margin (usually the former!)?


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Other Example Of Conjoint

Analysis According to responses, here is the ranking

of 5 attributes :-

Flavor23 %

Price47 %

Container4 %

Freshness19 %

Healthiness7%


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Using the results..

Given the consumers' ratings of diverse

combinations, the software package

computes a mathematical regression to tellus how important each of the five factors is

to the individual responding consumer, and

to the group of responding consumers as awhole.


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.

The end result is a quantitative, what

consumers really want, with each attribute

evaluated in the context of the others.


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.Advantages

estimates psychological tradeoffs that

consumers make when evaluating several

attributes together

measures preferences at the individual level

uncovers real or hidden drivers which may

not be apparent to the respondent

themselves

realistic choice or shopping task


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.Advantages (cont.)

able to use physical objects

if appropriately designed, the ability to

model interactions between attributes can beused to develop needs based segmentation


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Disadvantages

designing conjoint studies can be complex

with too many options, respondents resort to

simplification strategies

difficult to use for product positioning

research because there is no procedure for

converting perceptions about actual featuresto perceptions about a reduced set of

underlying features


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Disadvantages (cont.)

respondents are unable to articulate attitudes

toward new categories, or may feel forced

to think about issues they would otherwise

not give much thought to

poorly designed studies may over-value

emotional/preference variables and

undervalue concrete variables

does not take into account the number items

per purchase so it can give a poor reading of

market share


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Conclusion.

Conjoint analysis is one of the terms used to

describe a broad range of techniques for

estimating the value people place on theattributes or features that define a product

and service. Conjoint Analysis is perfect for

answering these types of questions: What is the optimal feature set for my

product?


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. What price level maximizes its

profitability? What services are consumers willing to pay

more for in the product?

Which of these changes will increase ourmarket share?

What impact will this have on my current

suite of products/cannibalization?


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.

Thanks

conjoint analysis 12345

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