New Ways to Answer Old Questions:

Conjoint analysis takes the guesswork out of

pharmaceutical marketing decisions

Presented By:Phil Serak

Crystal Behrendt

In today’s world of marketing, these are questions frequently asked by marketing managers.• How should I price my new

product?

• Will I be able to maintain

sales revenues given the

new competition?

• How sensitive is my market

share?

• Are my products positioned

well in the market?

• Can I improve my product

and market position?

Problems Discussed

Chances are excellent that the market for a company’s product or service offering has changed or is about to change.

▫ Constant growth of private labels and generics

▫ Innovative new products

▫ New marketing practices

▫ Consumers change of preference

The forces of intensified competition and changing consumer preferences pose significant and real threats to the cherished consumer franchises.

Beta Company

• Specializes in a liquid dietary supplement

• Competitors: Gamma and Delta

• Concerns: ▫ Changes in product

attributes ▫ What's the ideal product

to add▫ What are the competitors

ideal products that they can add?

Background Information (Cont.)

Past Present

• In the past the mentioned questions on our first slide were used to provide information about a market. Often times though, they couldn’t gather the needed information because consumer’s preferences couldn’t be assessed correctly and any info gathered was in fact useless

•New developments in marketing research have made it possible for information to be gathered more accurately (info such as trade-offs consumers make, gains/loses in market share, sales volume, gross profit)

Methodology

Conjoint Analysis

• First introduced in marketing in the early 1960’s

• Every year hundreds of conjoint studies are performed

• Found in many areas

• Popular in the telecommunication and Pharmaceutical sectors

Methodology

Conjoint Analysis

• Requires participants to make a series of trade-offs between products

• The analysis of the trade-off reveals the importance of the attributes of each product being decided between

Solutions Proposed

• Line Extension: Introduce new product, Beta2

• Change product attributes: Turn current product into ideal product

Comparison Table

Solutions Proposed (Cont.)• After studying the alternative choices Beta Company

decided to introduce the line extension Beta2

• Though no market share information and info about their financial return were given in the article, the extension itself had been viewed as successful

Take Home lessons

Conjoint analysis is used in many different industries:

• Marketing• Product Management• Operations Research

Also used for many different reasons:

• Test customer acceptance of new product designs• Appeal of advertisements• Service design • Product positioning

Limitations• 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 features to perceptions about a reduced set of underlying features

• 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

Questions?