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 LifeWeightPrice 6 Hours3 kg80,000 4 Hours2 kg60,000 2 Hours1 kg40,000

Ideal Laptop Battery LifeWeightPrice 6 Hours1 kg40,000

Traditional Method RankBattery LifeRankWeight 16 Hours33 kg 24 Hours22 kg 32 Hours11 kg

Trade offs Buyer 1 Weight 1 kg2 kg3 kg Battery Life 6 Hours124 4 Hours356 2 Hours789

Trade offs Buyer 1 Weight 1 kg2 kg3 kg Price Rs.40, Rs.60, Rs.80,000479

Trade offs Buyer 1 Weight 1 kg 50 2 kg 25 3 kg 0 Battery Life 6 Hours Hours Hours

Trade offs Buyer 1 Weight 1 kg 50 2 kg 25 3 kg 0 Price Rs.40, Rs.60, Rs.80,

Part-Worths (Utilities) Battery Life Part worth WeightPart worth PricePart worth 6 Hours1003 kg080, Hours602 kg2560, Hours01 kg5040,00020

Conjoint Analysis CombinationPreference Rating 6 Hours 3 Kg Rs Hours 2 Kg Rs Hours 2 Kg Rs Hours 3 Kg Rs Hours 2 Kg Rs Hours 1 Kg Rs Hours 3 Kg Rs Hours 2 Kg Rs 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