applied conjoint analysis
DESCRIPTION
Applied Conjoint Analysis. Applied Conjoint Analysis. Conjoint, or trade-off, analysis can be a powerful tool for the marketer, typically used when the research question concerns product or service development issues or pricing strategies. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/1.jpg)
Applied Conjoint Analysis
![Page 2: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/2.jpg)
2
Conjoint, or trade-off, analysis can be a powerful tool for the marketer, typicallyused when the research question concerns product or service development issuesor pricing strategies.
By asking respondents to “trade-off” one product feature to obtain another,conjoint unearths the importance of product features to consumers’ purchasedecisions, and calculates the particular combination of price and specific productfeatures which maximize a product’s appeal to consumers.
Applied Conjoint Analysis
![Page 3: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/3.jpg)
3
A Note on the Effectiveness of Conjoint Analysis
“Traditional conjoint analysis makes some heroic assumptions, including the proposition that the value of a product is equal
to the sum of the value of its parts (i.e., simple additivity), and that complex decision-making can be explained using a limited number of dimensions. Despite the leaps of faith, conjoint analysis tends to work well in practice, and
gives managers, engineers and marketers great insight to reduce uncertainty when facing important decisions.
Conjoint analysis isn’t perfect, but we don’t need it to be. With all its assumptions and imperfections, it still trumps other
methods.”
Source: Quirk’s, July / August 2004
![Page 4: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/4.jpg)
4
Conjoint Overview
Factors or Features
Levels within Factors
Key Outputs:-Relative importance of factors-Preference for levels of a given factor-Utility structures
Key Analysis:-Simulation models -current product mix -new product development -segmentation-Price elasticity
![Page 5: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/5.jpg)
5
Product FactorsKitchen Faucets:
-Type of handles-Type of spout-Finish-Sprayer-Washer type-Warranty-Brand-Price
![Page 6: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/6.jpg)
6
Levels of Product FactorsKitchen Faucets:
-Type of handles
• 2 handled metal• 2 handled acrylic• 1 handled ball
Etc.
![Page 7: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/7.jpg)
7
How do I know what factorsand levels to use?
-Typically, qualitative analysis is done first (focus groups, for instance)
-Look to your client (as a vendor)
-If YOU ARE the client, look to internal decision makers, product managers, secondary data – do your homework!
Without the right factors and levels, a conjoint study is worthless!
![Page 8: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/8.jpg)
8
The ProcessOnce you’ve selected factors and levels, be sure to provide the appropriate stimuli to respondents prior to the conjoint task.
For example, if finishis a factor, show REAL versions, not just images or descriptions.
![Page 9: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/9.jpg)
9
Key Outputs
![Page 10: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/10.jpg)
10
RELATIVE IMPORTANCE OF TRADE-OFF FACTORS-KITCHEN FAUCET-
5%
15%
17%
19%
39%
5%
0% 10% 20% 30% 40% 50%
Valve
Price
Finish
Brand
Spout Type
Handle Type
The importance of each “product factor” to the consumer’s product selection. For example, how much impact does finish type have compared to price or brand? The following is an example from the kitchen faucet discussed earlier.
As can be seen, the type of spout has much more impact than either handle type or brand.
FACTOR IMPORTANCE
![Page 11: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/11.jpg)
11
93.097.197.1
98.4100.1
103.8104.8105.6
UTILITY: HANDLE TYPE
1 Handle – Porcelain Lever
2 Handle-Metal Levers
2 Handle – Porcelain Levers
1 Handle – Acrylic Knob
1 Handle – Decorative Metal Lever
2 Handle – Acrylic Knobs
1 Handle – ½ Ball Lever
2 Handle – Porcelain Cross Levers
UTILITY STRUCTURE“Utility” is a numerical expression of the value consumers place on an factor level.
A “higher” utilitymeans it has morevalue, a “low” utility means it has less value.
![Page 12: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/12.jpg)
12
LEVEL PREFERENCE: HANDLE TYPE
10%
10%
10%
14%
15%
16%
14%
10%
0% 10% 20% 30% 40%
2 Handle: Acrylic
1 Handle: Porcelain
1 Handle: Decorative Metal
2 Handle: Porcelain Cross
1 Handle 1/2 Ball
1 Handle: Acrylic Knob
2 Handle: Metal Levers
2 Handle: Porcelain
The value of each “level” of a factor to consumers (e.g., the different finishes tested).
The sample graphic shows the percent preferring each level of the ‘handle’ factor for the kitchen faucet example.
LEVEL PREFERENCE
![Page 13: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/13.jpg)
13
Composition Rule: Additive
Factor1, Level1+Factor2,Level3+Factor3,Level2=Overall Utility
UTILITY STRUCTURE
![Page 14: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/14.jpg)
14
14%
17%
26%
27%
16%
0% 10% 20% 30% 40% 50%
Brand Z
Brand X
Cheapstuff
Faucets ‘R Us
Faucets, Faucets, Faucets
Faucets, Faucets, Faucets1 H – FlatD Tube SpoutSpray 400/8500No FilterChrome$58.09 (highest)Ceramic Disc
Cheapstuff1H – FlatCurved SpoutSpray 400/8500No FilterChrome$59.63 (highest)Stainless Steel Ball Brand X
1H – Flat D Tube SpoutSpray 400/8500No FilterChrome$61.92 (highest)Plastic Cartridge
Brand Z1H – Flat Curve SpoutSpray 400/8500No FilterChrome$58.09 (highest)Ceramic Disc
Faucets ‘R Us1H – Ball D Tube SpoutNo SprayNo FilterChrome$63.06 (highest)Stainless Steel Ball
Kitchen Faucet Simulation:Single Handles
SIMULATION
![Page 15: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/15.jpg)
15
BRAND 'X' PREFERENCE: PRICE ELASTICITY
(n=68)
7%
24%
13%
37%
19%
0%
10%
20%
30%
40%
Lowest Lower Retail Higher Highest
BRAND 'Z' PREFERENCE: PRICE ELASTICITY
(n=167)
61%
8% 5% 6%
20%
0%
10%
20%
30%
40%
50%
60%
70%
Lowest Lower Retail Higher Highest
PRICE ELASTICITY
![Page 16: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/16.jpg)
16
Three main categories
-Traditional-ACA (Adaptive Conjoint)-CBC (Choice Based Conjoint)
CONJOINT METHODS
![Page 17: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/17.jpg)
17
Traditional Conjoint
Uses an “orthogonal array” for product combinations.
The trade-off task is typically a card sort – for example, 16 cards depicting the array were given to respondents and sorted from most desirable to least desirable. Ratings can be used as well.
The analysis takes the rank order (or ratings) of the stimuli and uses it to calculate individual utilities that can then be extrapolated to all possible combinations.
-Price elasticity is suspect.-Limited number of factors and levels.-Main effects model.
![Page 18: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/18.jpg)
18
TRADITIONALCONJOINTEXAMPLE
-Stimuli needed-Respondent task-Data analysis
![Page 19: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/19.jpg)
19
SUBJECT NAME: 310 Importance Utility(s.e.) Factor +---------+ BRAND BRAND |56.41 | -1.0000(1.3434) -| BALDWIN +---------+ .0000(1.3434) | WEISER LOCK | 6.0000(1.3434) |---- SCHLAGE | -5.0000(1.3434) ---| TITAN | +--+ PRICE PRICE 15.38 | | 1.2500(1.3434) |- $89 +--+ .5000(1.3434) | $99 | .0000(1.3434) | $139 | -1.7500(1.3434) -| $169 | +-+ QUALITY BRASS QUALITY 8.97 | | .8750( .7756) |- 100% SOLID CORE +-+ -.8750( .7756) -| SOLID FORGED BRASS | +-+ SECURITY SECURITY 13.46 | | -.2917(1.2126) | 100% GRADE 1 CERTIFI +-+ -1.1667(1.0341) -| MAX. SECURITY FEATUR | 1.4583(1.2126) |- GRADE 2 CERTIFIED | ++ GUARANTE GUARANTEE 5.77 || .5000(1.0341) | LIFETIME FINISH ++ -.6250(1.2126) | LIFETIME MECHANICAL | .1250(1.2126) | FINISH & MECHANICAL | 8.6667( .8575) CONSTANT Pearson's R = .942 Significance = .0000 Kendall's tau = .795 Significance = .0000
![Page 20: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/20.jpg)
20
SUBFILE SUMMARY Averaged Importance Utility Factor +------+ BRAND BRAND |24.81 | .1622 |- BALDWIN +------+ -.7182 ---| WEISER LOCK | .7492 |--- SCHLAGE | -.1931 -| TITAN | +---------+ PRICE PRICE |33.95 | .6948 |--- $89 +---------+ .4172 |-- $99 | -.3211 -| $139 | -.7910 ---| $169 | +-+ QUALITY BRASS QUALITY 8.18 | | .1948 |- 100% SOLID CORE +-+ -.1948 -| SOLID FORGED BRASS | +----+ SECURITY SECURITY 18.21| | .6752 |--- 100% GRADE 1 CERTIFI +----+ .3528 |- MAX. SECURITY FEATUR | -1.0280 ----| GRADE 2 CERTIFIED | +---+ GUARANTE GUARANTEE 14.85 | | -.5713 --| LIFETIME FINISH +---+ -.0174 | LIFETIME MECHANICAL | .5888 |-- FINISH & MECHANICAL | 8.5546 CONSTANT Pearson's R = .995 Significance = .0000 Kendall's tau = .933 Significance = .0000
![Page 21: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/21.jpg)
21
ACA
Adaptive Conjoint Analysis is a hybrid conjoint approach in that it uses both analysis of product combinations (combinations of factor levels) as well as self-reported importance information to derive utilities.
Three components of analysis:
-Factor ratings (preferability)-Rank order of levels within factors-Graded comparisons of partial product combinations
-It allows for a larger number of factors and levels can be analyzed.-Can only be administered via computer.-Cannot analyze interactions.-Price elasticity still an issue.
![Page 22: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/22.jpg)
22
EXAMPLE: factor ratings (preferability)
![Page 23: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/23.jpg)
23
EXAMPLE: comparisons of factor levels
![Page 24: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/24.jpg)
24
EXAMPLE: product comparisons
![Page 25: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/25.jpg)
25
EXAMPLE: purchase likelihood
![Page 26: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/26.jpg)
26
CBC
CBC, or Choice Based Conjoint, has become the preferred method, due to it’s ability to truly gauge price elasticity, and it’s easy to comprehend trade-off task.
Full product combinations are pitted against each other in “choice sets”. Respondents choose among the products depicted, or (as an option) can choose none of the products.
A respondent typically receives anywhere from 10 to 20 choice sets, depending on the number of factors and levels in the design.
-It’s modeling capabilities (interactions, special effects, etc.) are seen as an improvement from prior methods.-Due to relative pricing, elasticity models are more accurate.-Like ACA, allows for more factors and levels than traditional method.-Individual utilities now available (first versions generated aggregate models)
![Page 27: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/27.jpg)
27
CBC EXAMPLE
-Stimuli needed-Respondent task-Data analysis
![Page 28: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/28.jpg)
28
![Page 29: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/29.jpg)
29
![Page 30: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/30.jpg)
30
![Page 31: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/31.jpg)
31
![Page 32: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/32.jpg)
32
![Page 33: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/33.jpg)
Max/Diff Analysis
![Page 34: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/34.jpg)
34
MaxDiff is an approach for obtaining preference/importance scores for multiple items (brand preferences, brand images, product features, advertising claims, etc.). Although MaxDiff shares much in common with conjoint analysis, it is easier to use and applicable to a wider variety of research situations. MaxDiff is also known as “best-worst scaling.” *
MaxDiff (or Best/Worst) is primarily used to gain a hierarchy of a set of items – such as importance ratings, value propositions, menu choices, etc.
Like ‘conjoint’ or ‘discrete choice’ methods, the result is a ‘derived’ measure of strength or impact.
Why use MaxDiff instead of standard rating scales? Research has shown that MaxDiff scores demonstrate greater discrimination among items and between respondents on the items. The MaxDiff question is simple to understand, so respondents from children to adults with a variety of educational and cultural backgrounds can provide reliable data. Since respondents make choices rather than expressing strength of preference using some numeric scale, there is no opportunity for scale use bias. This is an extremely valuable property for cross-cultural research studies. *
*Source: Sawtooth Software
Max/Diff Analysis
![Page 35: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/35.jpg)
35
Source: Sawtooth Software
![Page 36: Applied Conjoint Analysis](https://reader035.vdocuments.mx/reader035/viewer/2022081502/56815b70550346895dc9672d/html5/thumbnails/36.jpg)
36
DISCOUNT OFFERS:Derived Preference
6%
19%28%
33%
38%47%
54%66%
75%82%
86%93%
52%
34%
10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Blockbuster Gift Card for $10
Chili’s Gift Card for $10
Blockbuster Gift Card for $15
Chili’s Gift Card for $15
Blockbuster Gift Card for $20
$25 oil change every time
$25 comprehensive analysis
Chili’s Gift Card for $20
$9.00 per day loaner car
Gas Card for $10
Discount Card for 10%
$25 free auto repair (no minimum ticket)
Gas Card for $15
Free loaner car
Gas Card for $20