Conjoint Analysis

Assume that you want to buy a Mobile Phone

Tri Band GSM 1.3 M Camera with flash 2 GB Memory MP3 Play back FM with recording Blue tooth Wireless & Browser Nokia Rs.9350/-

Tri band GSM 2.1 M Camera with

Flash 1 GB Memory MP3 Play back FM with recording Blue tooth Wireless & Browser Motorola Rs. 8890/-

Laptop Conjoint

Battery Life Weight Price

6 Hours 3 kg 80,000

4 Hours 2 kg 60,000

2 Hours 1 kg 40,000

Ideal Laptop

Battery Life Weight Price

6 Hours 1 kg 40,000

Traditional Method

Rank Battery Life Rank Weight

1 6 Hours 3 3 kg

2 4 Hours 2 2 kg

3 2 Hours 1 1 kg

Trade offs

Buyer 1

Weight

1 kg 2 kg 3 kg

Battery Life

6 Hours 1 2 4

4 Hours 3 5 6

2 Hours 7 8 9

Trade offs

Buyer 1

Weight

1 kg 2 kg 3 kg

Price

Rs.40,000 1 3 6

Rs.60,000 2 5 8

Rs.80,000 4 7 9

Trade offs

Buyer 1

Weight

1 kg

50

2 kg

25

3 kg

0

Battery Life

6 Hours

100

1

150

2

125

4

100

4 Hours

60

3

110

5

85

6

60

2 Hours

0

7

50

8

25

9

0

Trade offs

Buyer 1

Weight

1 kg

50

2 kg

25

3 kg

0

Price

Rs.40,000

20

1

70

4

45

7

20

Rs.60,000

5

2

55

5

30

8

5

Rs.80,000

0

3

50

6

25

9

0

Part-Worths (Utilities)

Battery Life

Part

worth

Weight Part

worth

Price Part

worth

6 Hours 100 3 kg 0 80,000 0

4 Hours 60 2 kg 25 60,000 5

2 Hours 0 1 kg 50 40,000 20

Conjoint Analysis

Combination Preference Rating 6 Hours 3 Kg Rs.80000 6 Hours 2 Kg Rs.60000 6 Hours 2 Kg Rs.40000 4 Hours 3 Kg Rs.80000 4 Hours 2 Kg Rs.60000 4Hours 1 Kg Rs.40000

2 Hours 3 Kg Rs.80000 2 Hours 2 Kg Rs.60000 2 Hours 1 Kg Rs.40000

What is Conjoint Analysis?

Family of techniques that model choice by decomposing overall preference or evaluation in terms of the relative values of the components or attributes to respondents.

Conjoint analysis requires research participants to make a series of trade-offs. Analysis of these trade-offs will reveal the relative importance of component attributes.

Applications

New product design Fine-tune marketing mix Simulate markets: Which brand

configuration performs best against current and likely competitor brands?

Packaged Soup Attributes

Full Profile Stimulus Card

Utility Coefficients

Attributes Should Be… Determinant

Easily measured and communicated

Controllable by the company

Realistic

Such that there will be preferences for some levels over others

How Many Levels per Attribute?Must consider: Levels and their range should be

meaningful, informative, and realistic to consumers and producers

Marginal increases in levels can greatly increase respondent’s reaction

Conjoint Analysis-Uses

An extremely powerful and useful analysis tool Used to determine the relative importance of

various attributes to respondents, based on their making trade-off judgments

Useful in Helping to select features on a new product/service Understanding relationships (interdependencies) Predicting sales

Input

The dependent variable is the preference judgment that a respondent makes about a new concept

The independent variables are the attribute levels that need to be specified

Respondents make judgments about the concept either by considering

Two attributes at a time

Trade-off approach Full profile of attributes

Full profile approach

Output

A value of relative utility is assigned to each level of an attribute called partworth utilities

The combination with the highest utilities should be the one that is most preferred

And the combination with the lowest total utility is the least preferred

Limitations

In the trade-off approach, the task is too unrealistic

Trade-off judgments is being made on two attributes, holding the others constant

In the full-profile approach, the task can get very demanding, if there are multiple attributes and attribute levels