consumer preferences for energy efficient room air conditioner in malaysia: a conjoint approach

7/29/2019 Consumer Preferences for Energy Efficient Room Air Conditioner in Malaysia: A Conjoint Approach

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2002 Student Conference on Research and D evelopmentProceedings, Shah Alam, MalayslaSCORimWl

Consum er Preferences for E nergy Efficient Room A ir C onditioner inMalaysia: A Conjoint ApproachTan Mong HockMd Shah bin Majid and Hasimah Abd Rahm an

Faculty of Electrical EngineeringUniversity Technology ofMala ysia (UTM)81310 Skudai, Johor, Malaysia

Abstrucl - In order to ensu re the success of energyefficiency standards and labeling program, adetailed consumer analysis of room airconditioner market should be Carried out. It isessential to know what factors influencepreferences for room air conditioner, so thatprogram can be devised to increase the marketshare for energy efficient room air conditioner.Previous researchers typically have used attitude

. aid opinionswveys to investigate consumersperceived importance of product attributes.However, these approaches do not requireconsumers to trade-off among d ifferent attributes.In this study, conjoint analysis was used toanalyze consumers preferences for room airconditioners described by a set of 5 attributes,examining the relative importance as well as thetrade-off among these attributes. Among allattributes, price is the most important factor inpurchasing a roam air conditioner. However,different consumer group s attach different relativeimportance to these attributes was observed..

1. INTRODUCTIONIn early 1997, the Energy ResearchGroup of Universiti Teknologi Malaysia initiateda research on the feasibility of stan dardizatio n andappliance labeling program in Malaysia.Currently, no regulation has been imposed on themanufacturer to produce an energy efficientappliance. However the govemment through theDepartment of Electricity and Gas SupplyMalaysia has planned to enforce minimum energyperformance standa rds (MEPS) for some domestic

electric appliances. Appliance standards are a setof procedures and regulations which prescribe theenergy performance of manufactured products,sometimes prohibiting the manufacture ofproducts less energy eficient than the minimumstandards.

Malaysia, like many other developingcountries with hot and humid climates, has beenexperiencing dramatic growth n the number anduse of room air conditioners. As the economy

recovers and income level rise, more consumerswill seek air cond itioning. Since there is potentialof substantial energy saving in the domestic roomair conditioning sector, the establishment ofenergy eaciency standard for room airconditioner has been given priority.In order to achieve the minimumefficiency standard, the manufacturers may haveto m o d e their current designs. This may lead tochanges in room air conditioners attributes suchas price increment and energy saving. Thesechanges will affectroom air conditioner purchasesespecially for lower income people. So, in order toensure the suc cess of energy efficiency stan dardsand labeling program, a detailed consumeranalysis of room a ir conditioner ma rket should becarried out.The objective of this study is todetermine which room air conditioner attributesconsumers value most and estimate how changesin these attributes resulting from an efficiencystandard may affect room air conditionerpurchases and consum er utility.

2. METHODOLOGYConsumer decision making with respecttopurcha sing a product is a four stage process: needrecognition; search for information; evaluation ofalternatives; and choice. Methods to analyzeconsumer preferences can be classiiied incompositional and decompositional models.Among dec ompositional models, conjoint analysishas become an increasingly popular approach toestimate the benefits received from the attributes

of a product.

Conjoint analysis inform the researcherabout the structure of consumers preferenceswhich are obtained from their overall judgementof a set of alternative products defined a s acombination of levels of different attributes 111.Green and Krieger also pointed out the potentialusefulness of conjoint analysis to estimate

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product's market shares in alternative competitivescenarios [2].The necessary data to carry out theconjoint analysis consist of consumers'evaluation of alternative product conceptsdescribed as a set of attribute levels [3].Generally, the most common method of datacollection (which is also used in this study) is thefull profile method. Consume rs are asked to scoreeach alternative product concept taking intoconsideration their preferences.2.1 Research Designdescribed in five steps:Generally, conjoint analysis can be

( I ) determination of the relevant attniutes;(2) determination of the relevant levels foreach of the product attributes;(3) generation of product profiles and datacollection.(4 ) the estimation method( 5 ) the an alysis of the results.

2.1.1 Determination of the Attributes andTheir Respective Levelsproduct attributes are components orcharacteristics of the product. Conjoint analysisstarts with the determination of relevant productattributes that are believed to influence aconsumer's preferences (between different roomair conditioners). The attributes should includethose most relevant to potential consumers andthose that can be influenced or man ipulate d by themanufacturer [4]. For the relevant attributes,levels must be assigned to them.'These levelsmust be plausible, actionable and c apable of beingtraded &. After focus gmup discussion andconsultation from the room air conditionerretailers, 5 attributes have been determined. Theattributes' levels are a s follows:(1) Price-RM1300, RM1500 andRM1700(2 ) Energy savi+RMO, R M l O O andRM200(3 ) Brand-N ational, Acson and York

(4) Warranty yea-I, 2 and 3( 5 ) Quiet'operation-Yes, No2.1.2 Generation of Product Profiles andData CollectionHaving established the relevant attributesand the ir levels, hypothetical product profiles with

different com binations of attributes are presentedto individuals. This study give rise to 162 possiblecombinations ( 3 x 3 ~ 3 ~ 3 ~ 2 ) .learly it would havebeen unrealistic to ask individuals theirpreferences for so many scenarios. This studyutilized a fractional factorial design, under SPSS

Conjoint, to reduce the number of profiles to 15,while at the same time maintaining orthogona lity.Th e full profile approach is used as themeans of presentation to the respondent. Underthis approach, respondents are asked to rate theproduct profiles according to preference. Eachprofile defining a level of each of the 5 attributes.The rating scale is anchored from 0 to IO, with 0being certainly would not purchase and 10beingcertainly would purchase. The product profileswere administered to 127 respondent.Respondents were chosen at random in both JohorBahru (60) and Ayer Tawar (67).

C h n l y wouldwould

Room Ai r Conditioner 1Unit Price: RM 1500Energy Saving: RM 100Brand: Acson

Warranty: 1 yearQuiet operation: YesCRtainly

Not purchase PUIChaSe0 1 2 3 4 5 6 7 8 9IO

Fig. I . Example of a product profile

TABLE 1Background Characteristic ofRespondents

Category Respondents %(n=127)Gender Male 58.2Female 41.8Age S30 34.8

250 12.931-50 ' 52.3

Education Primary 29.4PMR/SPM 54.1DipDegree 16.5~

Income RM3000 22.7

2.1.3 Estimation MethodAll 127 respondents interviewedprovided a

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set of metric scores for the product profiles. Basedon these scores, the conjoint analysis procedurecalculates the contribution of each productattribute to the respondents preference. Thecontribution of the attribute level is termed aspart-worth utility. For each respondent, the part-worths were estim ated using ordinary least squareregression analysis. Conjoint uses the utilityranges to compute relative importance scores foreach attribute.

3. RESULTS A ND DISCUSSIONTable 2 shows the part-worth utilitiesscores and relative importance for each level ofeach attribute. R espondents overall felt that pricewas the most important factor (35.42%) toconsider in purchasing a room air conditioner.This finding was consistent with past research onconsumer products[5]. Energy saving accountedfor 23%, closely followed by brand (20.07%),warranty period (12.23%) and the least-valuedattribute, quiet operation (9.28%).

TABLE 2Results of Conjoint Analysis (Allrespondents).At trib ute hv el Utility Relative importance(%)Price 35.421. RM1300 1.73222. RM1500 -0.19663. RM1700 -1.5444Energy Saving 23.00I.RM0 -1.32222.RM100 0.41113.RM200 1.5667Brand 20.071.National 0.33332.Acson 0.00003.YOrk -0.3333

a negative utility (U=-1.5444), while a price ofRM1500 had a higher utility (U=-0,1966) and aprice of RM1300 had the highest utility(u=1.7322). The utility of the price attributeshows that respondents in this survey were priceconscious, deriving a higher utility from an air-con unit of a lower price.3.1 Relative Imp ortance ofAttributes forDifferent Mark et Segments

2 35p 20

3025- 15 m-*

.-z l o-2 50 %I s-na BMd % m n y cuvlFig.2 Comparison ofrelative importance(Age)

p 40b- 5Pnr. s&na B m d w-y w..F i g 3 Comparison of relative importance

(Educational level)

Warran ty 12.231 . 1 year -0.66672.2 years 0.14453.3 years 0.7222Quiet operation 9.28].Yes 0.77782. No -0.7778

Within the attributes. the part-worthutilities of each level were also investigated. Withregard to the price of the airzon unit, RM1700had

mce sr.q ~ m d -7 wdFig.4. Comparison ofrelative importance

( IC an .5 )

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As shown in figure 2, 3, and 4, it wasdetermined that the relative importance ofattributes vary across consumer groups. Olderpeople put more emphasis on energy saving whileyounger people rely more on brand whenpurchasing a room air conditioner. On the otherhand, respondents with higher educational leveltend to purchase more energy eEcient airconditioner since they put more weight on energysaving than respondents with lower educationallevel. For respondents with lower income(

consumer preferences for energy efficient room air conditioner in malaysia: a conjoint approach

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