Guide: Conjoint Analysis
2 likes3,061 views
Conjoint analysis is a statistical market research technique used to evaluate how respondents value different product or service features, helping to guide product development and marketing strategies. It allows businesses to simulate potential market share and revenue, providing insights into consumer preferences and decision-making processes. The technique, particularly the choice-based conjoint approach, quantifies trade-offs consumers make and can be applied throughout all phases of product development.
Guide: Conjoint Analysis
- 1. Conjoint Analysis Conduct Pricing Research Effectively
- 2. What is Conjoint Analysis? Conjoint analysis is a statistical technique used in market research to determine how people value different features of a product or service. Also referred to as a trade-off analysis, conjoint is used determine what combinations of attributes is most influential on a respondents’ choice or decision-making. By analyzing how respondents make preferences based on a controlled set of potential products and services, the implicit valuations (utilities or parts-worth) of each attribute can be determined. The utilities or parts-worth values can then be used to simulate the estimated market share as well as potential revenue and profits of new products or services. Survey Analytics specializes in Choice-Based Conjoint (CBC). It is the most popular conjoint-related technique in use today. This is primarily because it is modeled after consumer behavior in real-life. Most purchases that consumers make are basically trade-off based. If someone is planning a trip to Hawaii, will they book a garden view room for $125/night, a partial ocean view room for $175/night, or a full ocean view room with a balcony for $225/night? This will depend on the type of person, as well as how much they are willing and able to spend.
- 3. Why do I need Conjoint Analysis? By using conjoint analysis in the initial product innovation phase, the days of spending loads of money to create products and putting it directly in the market are over. The use of conjoint analysis will offer data to help determine the direction new products and services could potentially take before heavily investing company resources. Conjoint analysis isn’t just for the idea phase. You can use it in all phases of bringing a new product or service to market, or you can use it with existing product or services to determine estimated market share among your competitors while discovering what things about certain products influences a respondents’ choice or decision-making. When specifically using choice-based conjoint, it quantifies the act of watching a person at the store trying to decide which kind of laundry detergent to purchase or which toothpaste to buy. And based on the answers given, one can then make a recommendation for new products or services and at what price point to offer it to achieve gains in market share.
- 4. How do I conduct Choice-Based Conjoint? The first thing you must do before creating a conjoint question in your survey is to clearly define the features and attributes for your study. If you cannot clearly define your features and attributes, or if your list appears to be extremely long, then you will need to do pre-conjoint research to determine your list of features and attributes. Features are different components that make up a product or service. Attributes, also known as levels, are varying elements within each component. If using a Hawaiian vacation package as an example, your rooms, flights, activities, and car rental are features of a conjoint analysis question. The attributes of a room are full ocean view, partial ocean view, and garden view, while activities attributes are snorkeling, swimming with turtles, or a booze cruise.
- 5. How do I conduct Choice-Based Conjoint? As a general rule of thumb, use no more than 5-7 features and 5-7 attributes per feature. There may be exceptions to this rule, depending on respondent size and how you want to use the data. Once that is done, you can add your conjoint instructions, features and levels into the question. Next, you will want to set up your task counts and concepts per task. After this, you may want to update prohibited pairs, add an n/a option, include fixed tasks, and select the best design option for your study. Survey Analytics supports Random, D-Optimal (beneficial for small respondent groups), and Import design options for choice based conjoint analysis.
- 6. How to analyze Choice-Based Conjoint To analyze the conjoint data collected in Survey Analytics, go to the Reports Tab, select "Choice Modeling" and then "Conjoint Analysis". There is an option to analyze the entire report or based on applied data filters or segmentation. What is Part-Worths? Part-worths means level utilities for conjoint attributes. When multiple attributes come together to describe the total worth of the product concept, the utility values for the separate parts of the product (assigned to the multiple attributes) are part-worths. The final parts-worth are re-scaled so that the part-worths for any attribute have a mean of zero, simply by subtracting the mean of the part-worths for all levels of each attribute. The higher the part-worth values within the feature set, the more preferred it was among the response group. Example: Vacationers booking a trip to Hawaii prefer to book ocean view rooms, then garden view rooms, then rooms with no view.
- 7. What is Relative Importance? For each Attribute, the difference between the highest and the lowest Part- Worth is calculated. This value, divided by the total across all the attributes, is the relative importance. This percentage value will identify the feature that most influences a respondent’s preference for a particular product or service. Example: When choosing a vacation package to Hawaii, room type was the feature that most influenced a respondent’s preference among different packages presented. In addition to the relative importance and parts-worth chart, Survey Analytics offers a market simulator tool, which will allow you to simulate other product options and view estimated market share, as well as various download options for further analysis. Relative Importance and Parts-Worth Table:
- 8. Survey Analytics about us We help companies listen. At Survey Analytics, surveys are just a small piece of the puzzle. We help companies listen through our suite of powerful and interconnected DIY research tools. Our platform gives you the actionable reports you need to engage with your audience. With real-time analytics and customizable dashboards, you can see the information that you need to make the right decisions. Aside from surveys, we offer high quality panel and community building software as well as a variety of tools for developers such as API calls to Salesforce and a mobile survey SDK. Our platform adheres to the highest levels of security to protect your valuable information. We support 44 languages and are currently helping clients in 15 countries and 30 different industries. www.surveyanalytics.com 1 (800) 326-5570 • USA +1 (513) 268-6458 • International @SurveyAnalytics Seattle 93 S. Jackson St. #71641 Seattle, WA 98104 Cincinnati 823 Delta Ave Suite F Cincinnati, OH 45226 Pune 501, 4th Floor, ITI Rd Aundh, Pune, 411007