Conjoint Analysis Design and Application

CONJOINT METHODOLOGY- SUMMARY 1. What attributes to include in the study? n Identify actionable attributes through expert judgment, consumer survey, or focus groups. Attributes can be product features/options, structural characteristics, appearance of product, and marketing mix variables n Use attributes that the target audiences can relate to 2. How many levels of attributes to include? n Identify discrete and continuous attributes (continuous attributes can be discretized) n In discrete case, generally can include 3 to 4 levels. Ex: Minimum, Maximum, and 1 or 2 levels in between. 3. How to get data from consumers? n Present “profiles” consisting of combinations of attribute levels. Each profile is a product/new concept in the “full-profile” approach. n Consumers either rank-order or rate profiles.

4. How to minimize profiles presented to consumers? n “Orthognal designs” to reduce number of profiles presented to consumers n “Adaptive conjoint” to minimize difficult of conjoint task by using prior information provided by consumers. Several commercial software, such as Saw Tooth, are available for this purpose. n “Hybrid conjoint” techniques may be used to distribute evaluation task among consumers 5. What to do with the data collected from consumers? n Assess relative importance of attributes n Compute utility associated with each level of each attribute n Perform simulations to identify good product designs 6. How to impact management decisions with conjoint analysis? n Use graphs to summarize data! n Translate results to managerially useful indices such as expected sales or market share for chosen product concepts n Provide pictorial renditions of chosen concepts

4. How to minimize profiles presented to consumers? n “Orthognal designs” to reduce number of profiles presented to consumers n “Adaptive conjoint” to minimize difficult of conjoint task by using prior information provided by consumers. Several commercial software, such as Saw Tooth, are available for this purpose. n “Hybrid conjoint” techniques may be used to distribute evaluation task among consumers 5. What to do with the data collected from consumers? n Assess relative importance of attributes n Compute utility associated with each level of each attribute n Perform simulations to identify good product designs 6. How to impact management decisions with conjoint analysis? n Use graphs to summarize data! n Translate results to managerially useful indices such as expected sales or market share for chosen product concepts n Provide pictorial renditions of chosen concepts

OTHER COMMERCIAL APPLICATIONS Consumer Non-durablesOther Products 1.Bar soaps1.Automotive styling 2.Hair shampoos2.Automobile tires 3.Carpet cleaners3.Car batteries 4.Synthetic-fiber garments4.Ethical drugs 5.Gasoline pricing5.Employee benefit package 6.Panty hose6.Job offers to MBA’s Financial ServicesOther Services 1.Branch bank services1.Car rental agencies 2.Auto insurance policies2.Telephone service pricing 3.Health insurance policies3.Information retrieval svcs. 4.Credit card features4.Medical laboratories 5.Consumer discount card5.Employment agencies Industrial/Business GoodsTransportation 1.Copying machines1. Air Canada 2.Printing equipment2.IATA 3.Fax machines3.American Airlines 4.Data transmission4.Canadian National Railway 5.Laptop computer5.AMTRAK

Dating Conjoint n What attributes would one look for in an ideal mate? n What are the levels of these attributes? n Would any combinations be unacceptable?

Dating Conjoint Design n Attribute 1: Age –levels: 18, 25, 35, 45, 60 n Attribute 2: IQ –levels: low, average, high n Attribute 3: Build –levels: heavy set, slim, athletic, obese n Attribute 4: Education –levels: High School, College, Graduate n Attribute 5: Height –levels: 6’0”, 5’10”, 5’6”, 5’0”