Conjoint analysis a perfect link between

International Journal of Management Research and Development (IJMRD) ISSN 2248-938X (Print),
International Journal of Management Research1, Jan-March (2013)
ISSN 2248-9398 (Online) Volume 3, Number and Development
(IJMRD), ISSN 2248 – 938X (Print)
IJMRD
ISSN 2248 – 9398(Online), Volume 3, Number 1
Jan - March (2013), pp.8-21
© PRJ Publication, http://www.prjpublication.com/IJMRD.asp © PRJ PUBLICATION

CONJOINT ANALYSIS: A PERFECT LINK BETWEEN
MARKETING AND PRODUCT DESIGN FUNCTIONS- A REVIEW
THOMAS JOSEPH
Doctoral scholar-Birla Institute of Technology and Science,
Pilani, INDIA
Dr. KESAVAN CHANDRASEKARAN
Dean- Faculty, RMK College of Engineering,
Kavaraipettai, Tamilnadu, INDIA

ABSTRACT

New products that deliver added consumer value contribute significantly to the success of
companies. In the numerous studies of new product performance over the years, consensus
has developed that understanding consumer needs is of paramount strategic value, especially
in the early stages of the product development process. During these early stages, the product
has not yet been specified and the aim is to search for novel product ideas from a marketing
and technological perspective. Industrial designers are increasingly challenged by the
interdisciplinary nature, increasing complexity and time pressure in today’s design projects.
Understanding the product’s environment, the user and incorporating all design aspects
accurately places a great burden on the designer. The constant risk that the negligence of
certain design aspects may result in inferior products, urges the need to use a systematic tool
that would support the designer in creating useful, usable and satisfying products and also to
assimilate and synthesize the Marketing function’s VOC (Voice Of Customer) information.
Traditional marketing thought and practice largely views new product development (NPD) as
an internal firm-based activity in which customers are relatively passive buyers and user.
This paradigm creates a ‘gap’ between the Marketing and Product Design functions. Conjoint
Analysis technique, is an ideal tool, to bridge this ‘divide’ and help, develop customer
focused, successful products.

INDEX TERMS: Conjoint analysis, Fuzzy-front end, New Product Development, Voice of
Customer, VOC translation tools

I INTRODUCTION

In order to survive, firms must innovate and innovation usually means new products,
new technology and new production techniques. But new technology is not sufficient for
profitability. Profit comes from sales and sales come from products that fill consumer needs.
(Utter back, 1974) in a review of studies spanning over 2000 products and 100 industries,
indicated that 60-80%, of successful innovations come from identification of a consumer
need.

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ISSN 2248-9398 (Online) Volume 3, Number 1, Jan-March (2013)

Understanding market needs in order to design products that meet or exceed
consumer expectations is one of the most critical tasks for developers of new products. In
the last decade, the importance of listening carefully to the 'voice of the consumer'
has become conventional wisdom (Slater and Narver, 2000; Garber, Hyatt and Starr,
2003). Over the years, many tools and techniques have been developed for use in the
new product development process (Thomas and Chandrasekaran, 2013). Better and
effective use of consumer intelligence obtained by appropriate methodologies is viewed
as critical to being successful (Cooper, Elko J. Kleinschmidt 1994; Calantone, Schmidt and
Song, 1996).
Recently, numerous new product development (NPD) performance studies have
shown that aligning new products with consumer needs and differentiation from competitors
is of crucial importance for success in the market place (Henard and Szymanski, 2001). One
of the most important factors leading to new product success is providing a unique and
superior product in the eyes of the consumer (Cooper, 1979; Cooper, Elko, J. Kleinschmidt,
1993). This has resulted in structured procedures that challenge new product ideas at their
various stages of development against consumer judgment. The best known of these
procedures is the stage-gate-process, consisting of a five-stage, five gate model in which
new product ideas are developed and tested before a “go or no-go” decision is made at each
of the subsequent gates (Cooper, 1990; O’Connor, 1998). The implementation of these
structured processes to challenge and verify new product ideas against consumer assessment
is identified as a key success factor in NPD. However, increasingly it is being recognised
that the quality of the ideas entering the NPD process is at least equally important to NPD
success as structured approaches (Wind and Mahajan, 1997). In fact, pre-development
activities (i.e. those activities carried out before products enter the development stage) are
among the most critical activities associated with success (Cooper, Elko J. Kleinschmidt
1988; Roozenburg and Eekels, 1995; Henard and Szymanski, 2001). In these pre-
development activities, important and (partly) unfulfilled consumer needs are being identified
as a source of new product ideas and these new product ideas are assessed on their feasibility
and consumer appeal very early on, in the process.
Consumer research is often considered difficult during this stage because it is unsure
what to ask consumers at this point. An often-heard argument is that asking consumers what
they want, is useless, because they do not know what they want (Ulwick, 2002). Consumer
research, however, helps to raise the odds of success in the market. Even though consumers
may not always be able to express their wants, it is important to understand how they
perceive products, how their needs are shaped and influenced and how they make product
choices based on them. In this way, it helps to avoid working on a new product that has a low
probability of success in the first instance (Rochford, 1991). Additionally, it guards against
potential winning product concepts, being overlooked. As a result, carrying out consumer
research in this stage is inexpensive compared to the risk of product failure.
Moreover, gathering consumer understanding with the help of formal consumer research
methods has the advantage that the results can more easily be disseminated across
departments in an organisation (Kohli and Jaworski, 1990). Knowledge obtained through
formal methods is generally used to a greater extent, most likely through its verifiability and
credibility (Maltz and Kohli, 1996).
New product development (NPD) can originate from new technology or new
market opportunities (Eliashberg, Lilien and Rao, 1997). But irrespective of where
opportunities originate, when it comes to successful new products, it is the consumer who is
the ultimate judge (Cooper and Kleinschmidt, 1987; Brown and Eisenhardt, 1995). So, in

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order to develop successful new products, companies should gain a deep understanding of
'the voice of the consumer' (Thomas and Chandrasekaran, 2013). New product development
(NPD) is an important driver of corporate growth and profitability (Sorescu, Chandy, and
Prabhu 2003; Wind and Mahajan 1997). Unfortunately, most new products fail to deliver on
their objectives (Christensen 1997). Hence, marketing scholars and practitioners have duly
devoted substantial attention toward improving NPD processes. This attention has led to
several important advances, including the specification of the Stage-Gate model (Cooper
1990), the formulation of sophisticated NPD tools such as conjoint analysis and pre-market
launch forecasting (Rangaswamy and Lilien 1997), and advances in knowledge about how
best to organize and manage NPD teams (Sethi, Smith, and Park 2001).
While everyone acknowledges, that consumer based product development, ensures
NPD success, there is still a huge gap between Marketing and Product Design functions. This
paper discusses a few key reasons for this gap and recommends Conjoint Analysis as an ideal
tool, which overcomes all the perceived and experienced deficiencies, in incorporating the
Marketing led, consumer research information, into Product Designs, by the development
team.

II LITERATURE SURVEY

Development and launch of successful new products is one of the most critical yet,
most challenging tasks managers face. From a strategic point of view, new products well-
attuned to the voice of the customer, with perceived technical superiority, developed within
budget and launched ahead of the competition provide real competitive advantages for the
firm (Calantone and Cooper, 1979; Cooper and Kleinschmidt, 1987; Crawford, 1994;
Hultink, Griffin, Hart and Robbenm, 1998).
Designing is a complex cognitive task and industrial designers have been increasingly
challenged with the interdisciplinary nature, increasing product complexity and time pressure
of modern design projects (Cross,1994; Earl, Eckert, & John Clarkson, 2005; Freudenthal,
1999). The task of the industrial designer can generally be seen as a complex, creative and
solution-focused problem solving process. This process is often characterised by a fuzzy
front-end, an ill-defined problem (Cross, 2004) and the problem and solution co-evolving
throughout the design process (Bezerra, 2000).
The best developed area of product design research is clearly that related to the
inﬂuence of various elements of product design on the consumer decision process. Beyond
simple consumer preference or choice, other outcome variables considered in this stream
have been the nature of ‘‘extreme’’ responses to product design efforts (Allenby and
Ginter, 1995), and the subjective (Luo, Kannan, and Ratchford, 2008) and symbolic
(Kreuz- bauer and Malter, 2005) interpretation of design elements. Product design has also
been closely tied to the study of hedonic and utilitarian beneﬁts perceived by consumers
(Chitturi, Raghunathan, and Mahajan, 2008).
Consumer research related to design uses advanced analytical tools which dis-
aggregate and vary design elements in order to optimize customer satisfaction (e.g.,
Green, Carroll, and Goldberg, 1981). Other studies have considered issues such as the unity
and proto-typicality of product designs (Veryzer and Hutchinson, 1998), the consequences of
simple versus complex designs (Cox and Cox, 2002) and the consequences of excessive
product features for the consumer (Thompson, Hamilton, and Rust, 2005). Another
perspective has taken a broad yet still dis-aggregated perspective on product design by

10


considering a more comprehensive picture of the full range of design elements and their
inﬂuence (Bloch, 1995; Noble and Kumar, 2010). In general, consumer based design research
has been informative in exploring new and insightful dimensions of a product that help
answer questions such as, ‘‘Just what is product design?’’ and ‘‘How can design inﬂuence
consumers?’’

Cross-functional interactions in the organization ( Ruekert and Walker, 1987)
consider the linkages between design and branding issues (Montana, Guzman, and Moll,
2007), links between design and marketing functions (Bruce and Daly, 2007) and general
cross-functional interactions involving design in the new product development process
(Antioco, Moenaert, and Lindgreen, 2008; Perks, Cooper, and Jones, 2005). There seems
to be often an unstated assumption that NPD is essentially an internal, firm-based activity. As
observed by (Von Hippel, 2009), “The idea that novel products and services are developed by
manufacturers is deeply ingrained in both traditional expectations and scholarship.” Hence,
NPD research and practice largely operates under a firm-centered paradigm in which
customers are viewed as having little active influence upon NPD activity. While this
paradigm may have served academics and practitioners well in the past, it is currently being
challenged by the emergence of empowered customers seeking greater input and control over
NPD activity (Seybold 2006). This challenge is ushering in a new paradigm in which firms
can enhance corporate growth and profitability by allowing customers to take a more active
role in NPD activity (Prahalad and Ramaswamy 2000; Von Hippel 2005).In this newly
emerging co-creation paradigm, customers are central and vital participants in the NPD
process. Despite this global wisdom, marketing and consumer information is not considered
for NPD and the departmental ‘silo’ continues, perhaps due to the following reasons.

III USE OF CONSUMER RESEARCH INPUT: PROBABLE REASONS FOR
NOT INCORPORATING INTO NPD

Consumer research lacks credibility:
A widespread belief among practitioners is that consumers cannot be trusted in their
opinion. Several studies have shown that it is difficult to predict final consumer behavior
based on consumers’ expressed attitudes towards products or certain issues. (Nijssen and
Lieshout, 1995) found that users of NPD methods mention this shortcoming of forecast
inaccuracies. Moreover, users mention as well, that methods are not able to capture the
complexity of the market place. Another problem that plays in NPD is that consumer research
is often part of marketers’ responsibility in a company. It is a well-known fact that both,
Marketing and Product Design professionals do not always consider each other’s information
to be credible (Song, Neeley and Zhao, 1996). Marketers are often viewed as ‘easy talkers’
by Product Design personnel, as relying too much on intuition rather than on hard facts
(Gupta, Raj and Wilemon, 1985; Moenaert and Souder, 1990). If people perceive information
as less credible, it means that they perceive the quality to be lower, and this will result in
lower information utilization.
Consumer research does not help to come up with innovative new product ideas:
Various studies have found that the key determinant of new product failure is an
absence of innovativeness, the extent to which a new product provides meaningful unique
benefits. Not much confidence, however, exists among product developers that consumer
research can provide a valuable contribution in the search for new and improved ways

11


of satisfying consumers’ needs. Although it is generally believed that listening to ‘the
voice of the consumer’ is important, the precise way of ‘listening’ is not always clear
(Thomas and Chandrasekaran, 2013). Effective use of consumer research for this purpose
has been identified as a problematic area, because it is unsure what to ask consumers (Ortt
and Schoormans, 1993; Ottum and Moore, 1997). An often-heard argument is that asking
consumers what they want is useless, because they do not know what they want (Ulwick,
2002). Moreover, the majority of available methods focus on evaluation of products (Wind
and Lilien, 1993). In these methods, products or product ideas are presented to a sample of
consumers and evaluations are collected. These evaluations are used to optimize the product
or to screen and select from different product ideas, ultimately ending up with the product
idea with the highest likelihood of market success (Ozer, 1999). However, these methods can
be considered as reactive of nature in their use in the early stages. They constrain the
researcher in the elicitation of unfulfilled consumer needs, because consumer input is
restricted to responses to an already existing concept or product. A risk of relying on them
solely is that they are likely to give product developers only ‘me-too’-ideas, which hardly
excite the consumer. (Burton and Patterson 1999) point to this problem by stating that most
consumer research only attempts to build on existing and often already fulfilled needs of
consumers. Consequently, the results of this kind of consumer research do not exceed
common sense knowledge and hence is consistent with what practitioners already take to be
true. (Smith, 2003) claims that this typically results in a ‘So what, I already suspected that’-
reaction on the part of the receivers of the results. In case consumer research does not exceed
the intuition of end-users and solely reaffirms existing beliefs, it tends to be less used.
Moreover, many studies are carried out to increase the salability of a decision. Such studies
are designed after a decision has been made to gain support rather than to provide a basis for
the foundation of new product ideas (Day, 1994).

Consumer research delays product development process:
Product life cycles are becoming shorter, which leads companies to reduce the time it
takes to introduce new products at the market. Being early is generally believed to provide a
significant competitive advantage. Companies that take too long in bringing new products to
the market, run the risk that others will get there first, or that consumer needs and wants will
change. Consumer research is time-consuming and extends rather than shortens the NPD
process. Moreover, consumer research requires additional resource investments (Miller and
Swaddling, 2002).
Consumer research lacks comprehensibility:
Consumer research must often be used by both marketing and Product Design teams.
Both marketing and Product design employees often complain that they have difficulty in
understanding each other. One of the reasons for this misunderstanding is that marketing has
its own set of technical terms, and Product Design team has another (Moenaert and Souder,
1990). As a result, consumer research can be difficult to comprehend. Comprehensibility of
information is the ease with which the receiver can decode and fully and unambiguously
understand the information (Moenaert and Souder, 1996). For instance, (Dougherty, 1992)
found that individuals from different functional departments understood different aspects of
product development, and they understood these aspects in different ways. The difference led
to varying interpretations, even of the same information.

12


Consumer research lacks action ability for Product Design team:
Information will be used if it is perceived to be relevant for the task for which the
receiver is responsible (Moenaert and Souder, 1996; Madhavan and Grover, 1998). Both
marketing and Product Design professionals need consumer information that is closely linked
to their own task in the development process. Marketers generally need information about
key drivers of consumer choice for the development of effective communication, product
positioning and segmentation strategies. Product Design professionals, in contrast, need
very concrete information about how consumer desired product benefits translate into
target values for technical development (Shocker and Srinivasan, 1979: Thomas and
Chandrasekaran, 2013). Product Design employees often complain that consumer research
provides insufficient actionable and detailed information about consumer requirements and
does not understand key issues about product development (Gupta, Raj, and Wilemon,1985).
As a result, they may reject the information, lose interest or produce their own information
on desired product features with the risk that the new product will not be entirely compatible
with the actual requirements consumers have (Bailetti and Litva, 1995). This need for
actionable information is becoming more important than it was in the past, because
individuals often feel overwhelmed by the huge amounts of information available.

IV CONJOINT ANALYSIS: A PERFECT LINK BETWEEN, MARKETING AND
PRODUCT DESIGN TEAMS

The concept of conjoint analysis is described by (Hair et al 1998:392) as follows:
“Conjoint analysis is a multi-variety technique used specifically to understand how
respondents develop preferences for products or services. It is based on the simple premise
that consumers evaluate the value of a product or service by combining the separate amounts
of value provided by each attribute.” (Sudman and Blair, 1998:229-230) warn that it is not a
data analysis procedure like factor analysis or cluster analysis. It must be regarded as a type
of “thought experiment” preferences for a product or service. (Kotler, 2000:339) defines
conjoint analysis as ”…a method designed to show how various elements of products or
services (price, brand, style) predict customer for deriving the utility values that consumers
attach to varying levels of a product’s attributes.” Churchill and Iacobucci (2002:748) refer to
conjoint analysis as “conjoint measurement, which relies on the ability of respondents to
make judgments about stimuli.” These stimuli represent some predetermined combinations of
attributes, and during a laboratory experiment, respondents are asked to make judgments
about their preferences for various attribute combinations. The basic aim, therefore, is to
determine the features they most prefer. From the definitions given above it is clear that
conjoint studies centre on certain attributes of products or services and also various levels
within each attribute. Given the increasing intensity of business competition and the strong
trend towards globalization, the attitude towards the customer is very important; their role has
changed from that of a mere consumer to the role of consumer, co-operator, co- producer, co-
creator of value and co-developer of knowledge and competencies. Furthermore, the
complex competitive environment in which companies operate has led to the increase in
customer demand for superior value. To determine strategically important customer value
dimensions, conjoint analysis has been proposed (Thomas and Chandrasekaran, 2013). The
results of conjoint analysis give a good picture about the importance of different product
attributes in creating value for customers (Thomas and Chandrasekaran). Thus it enables to
estimate the value created to customers with remarkable accuracy. It is also useful for market
segmentation decisions and other improvements that create value for company. Furthermore,
models based on conjoint data allow predicting the response of the market to changes in

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existing product concepts or price before the actual decision is made. While market research
can help us determine the “what” of customer needs in the marketplace, it rarely explores the
“why” sufficiently uncover information and gain insight into how better to stratify offerings
and the attributes of those offerings. This information can help us build a strategy for
maximizing the potential of these offerings to specifically targeted segments. In real-life
situation respondents may find it difficult to indicate which attributes they considered and
also how they combined them to form their overall opinion. The value of conjoint analysis
lies in the fact that it estimates how much each of these attributes is valued, and as Churchill
and Iacobucci (2002:748) state, “…the word conjoint has to do with the notion that the
relative values of things considered jointly can be measured when they might not be
measurable if taken one at a time.”

1) The value of conjoint analysis in consumer research:
In conjoint analysis respondents indicate their preference for a series of hypothetical
multi-attribute alternatives, which are typically displayed as profiles of attributes. The
responses to these profiles are analyzed to yield estimates of the relative importance of the
attributes and to build predictive models of consumer choice for new alternatives (Oppewal
and Vriens, 2000). Conjoint analysis is a dependence technique that has brought new
sophistication to the evaluation of objects, such as new products, services or ideas (Hair et al,
1998:15). The theory and methods of conjoint analysis deal with complex decision-making,
or the process of assessment, comparison, and/or evaluation. Conjoint analysis is
closely related to traditional experimentation. The conjoint technique developed from the
need to analyze the effects of the factors we control that are often qualitatively specified or
weakly measured. Conjoint analysis is actually a family of techniques and methods, all
theoretically based on the models of information integration and functional measurement
(Hair et al, 1998:388). Utility is a subjective judgment of preference unique to each
individual. It is the conceptual basis for measuring value in conjoint analysis. It is a measure
of overall preference because it encompasses all product or service features, both tangible and
intangible. Utility is assumed to be based on the value placed on each of the levels of the
attributes and expressed in a relationship reflecting the manner in which the utility is
formulated for any combination of attributes (Hair et al, 1998:392).

2) Key steps when designing a Conjoint Value Analysis:
There are many different conjoint methods. The researcher should weigh each
research situation and pick the right combination of tools for the project. (Sudman and Blair
1998:235) distinguish between an arrangement that uses all possible combinations of features
(”full factorial design”) and one that uses only some of the combinations (“fractional
design”). A general rule of thumb, according to these authors, is to limit the descriptions to
no more than 30. Full-profile conjoint value analysis (CVA) is useful for measuring up to
about six attributes (Hair et al, 1998:401). CVA calculates a set of utilities for each
individual, using traditional full-profile card-sort (either rating or ranked) or pair-wise
ratings. If the full-profile approach is used, it is important to limit the number of attributes
and levels, increase the number of profiles, or use more parsimonious models (such as the
vector or ideal point models) so as to increase he degrees of freedom for conjoint estimation
(Green and Srinivasan, 1990). Figure 1, summaries the selection of Conjoint Analysis
methods and Figure 2, details the steps that needs to be carried out, while using the Conjoint
Analysis Evaluation.

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15


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V CONCLUSION
According to (Hair et al, 1998:436) conjoint analysis places more emphasis on the ability of
the product designer to theorise about the behaviour of choice than it does using other
analytical techniques. The critical interplay between the assumed conceptual model of
decision-making and the appropriate elements of the conjoint analysis makes this a unique
multivariate method (Hair et al, 1998:436).
Conjoint Analysis (CA) techniques using direct voice of the customers, through the various
VOC Translation tools (Thomas and Chandrasekaran, 2013) ensure that, every “Voice of
customer” is captured and objectively and statistically, filtered. Therefore it is credible data,
that Product design teams can make use of. The use of Kano analysis, in the early stage, as an
input to CA, ensures that, stated and unstated needs of the customer, is captured. This leads, to
innovation. The use of statistical Design of experiment (DOE) tools ensures that, the number
of ‘experiments’ that needs to be conducted, is optimal, thus saving time and resources. The
use of CA speeds up the development, rather than, delay product development. The multiple
regression analysis and the output, of the statistical analysis ensure that the consumer research
data is ‘simplified” comprehensibly and the resultant, optimal design, ensure that, it is
actionable and executable. Application of Conjoint Analysis, to New Product Development
(NPD), ensures that Customer is indeed a King.

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