Team C day 11 (Akash Singh)

Akash Singh

14065

Conjoint Analysis

Conjoint analysis is a popular marketing research technique that marketers use to determine what features a new product should have and how it should be priced.  Conjoint analysis became popular because it was a far less expensive and more flexible way to address these issues than concept testing. 

Conjoint analysis has been successfully applied in many industries, such as Air Travel, Smart Phones, Computers, Financial Services, Health Care, Real Estate, and Electronics. If a job includes configuring a defined set of features for a product or service and the consumer’s purchase decision will be “rational,” conjoint analysis can help. If, on the other hand, one has to decide if a consumer’s purchase decision will be “impulse” or “image,” conjoint is not the right tool.

Respondents usually complete between 12 to 30 conjoint questions. The questions are designed carefully, using experimental design principles of independence and balance of the features. By independently varying the features that are shown to the respondents and observing the responses to the product profiles, the analyst can statistically deduce what product features are most desired and which attributes have the most impact on choice. In contrast to simpler survey research methods that directly ask respondents what they prefer or the important of each attribute, these preferences are derived from these relatively realistic tradeoff situations.

Because conjoint analysis helps one understand market’s preferences, it can be applied to a variety of difficult aspects of the job, including product development, competitive positioning, pricing, product line analysis, segmentation and resource allocation. “How should we price our new product to maximize adoption?” “What features should we include in our next release to take market share from our competition?” “If we expand our product line, will overall revenue grow, or will we suffer too much cannibalization?” “For which value-added features is the market willing to pay?”

Conjoint (trade-off) analysis has become one of the most widely-used quantitative methods in Marketing Research. It is used to measure the perceived values of specific product features, to learn how demand for a particular product or service is related to price, and to forecast what the likely acceptance of a product would be if brought to market.

Rather than directly ask survey respondents what they prefer in a product, or what attributes they find most important, conjoint analysis employs the more realistic context of respondents evaluating potential product profiles by giving them a variety of product details and arriving at a score.

There are different ways to show product profiles. The original version of conjoint analysis developed in the early 1970s showed products one-at-a-time, as in the above example. Sawtooth Software’s CVA System may be used for this traditional form of conjoint analysis. Later forms of conjoint analysis showed products in pairs (CVA system orACA System for Adaptive Conjoint Analysis), or sets at a time (CBC System for Choice-Based Conjoint).