Dr. Michael R. Hyman Conjoint Analysis

2 What is Conjoint Analysis? Answer: 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

3 Applications New product design Fine-tune marketing mix Find segments of consumers with homogeneous preferences Simulate markets: Which brand configuration performs best against current and likely competitor brands?

4 Examples and Basic Issues Associated with Attribute-based Conjoint Analysis

5 Example #1 Packaged Soup Attributes

6 Full Profile Stimulus Card

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8 Utility Coefficients

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10 Example #2 Utility Values for Three PC Attributes

11 Preferences for Different Combinations of Brewing Time, Capacity, and Cost in a Coffee Maker Example #3 10 Respondent’s Ordering of Various Product Descriptions

12 Resultant Derived Utilities Compute/Estimate these Values Some Arbitrary Attribute Utility Values and the Resulting Utilities for Various Alternatives Under an Additive Combination Rule

13 Attributes Should Be… Determinant Easily measured and communicated Controllable by the company Realistic Such that there will be preferences for some levels over others Compensatory As a set, sufficient to define the choice situation Without built-in redundancies

14 How Many Levels per Attribute? Must consider: Levels and their range should be meaningful, informative, and realistic to consumers and producers Avoiding absurd configurations Marginal increases in levels can greatly increase respondent’s task

15 Which Data Collection Method? Full profile: Show complete list of attributes –Limited to 6-7 attributes (Example #1) Pair-wise: Show pairs of attributes in matrix; each cell rated from most to least preferred (Example #3) –Lacks realism –Inconsistent responses likely Hybrid (ACA): Indicate –Attribute desirability at each level –Attribute importance –Full profile evaluation of a limited subset of product concepts

16 Conjoint Exercises from Dr. Tom Novak, Vanderbilt University Airline Travel Preferences Movie Theatre Preferences