Conjoint analysis

Conjoint analysis (also called trade-off analysis) is a multivariate technique used specifically
to understand how consumers develop preferences for products or services and to formulate
predictions about market attitude towards new product concepts.
The method is based on the multi-attribute product concept i.e. on the premise that
consumers evaluate the value or utility of a product/service idea by combining the separate
amounts of utility provided by each attribute.
A conjoint analysis brings answers to the following questions.
For the respondent, what is the partial utility (or the part worth) of each level of each
attribute used to define the product/service?
What is the relative importance (weight) of each attribute in the overall evaluation of the
product concept?

.How does the respondent compare the total utilities of several concepts representing
different bundles of attributes?
What kind of trade-off or arbitrage are potential consumers willing to make between levels
of attributes?
What is the share of preferences of potential buyers for the different product concepts
investigated?



Process
There are several basic steps to be taken by a marketer interested in applying conjoint
analysis:
- Determine which product/service attributes or features are most important to the market.
- Determine which data collection methodology will be used to recruit respondents and how
the data will be captured (mail, telephone-mail, disk-by-mail, Internet, etc.).
- Determine which conjoint methodology will best fit the research problem. Choice-based
conjoint and preference-based conjoint are the most common methodologies used today.
- Create an experimental design which will allow the calculation of main effects and key
interactions between the attributes being studied. Many conjoint studies only focus on the
main effects or direct utilities for each attribute, however, when attributes such as price or
brand name are used, potential interactions between attributes should also be considered.
- Collect the data. After pre-testing your attribute list and survey instrument, begin collecting
data from the target market.
- Calculate the utilities for each respondent or for groups of respondents.
- Create a market simulation model. This allows you to predict the impact of changes in
existing products and the introduction of new products on the market.

Advantages]
estimates psychological tradeoffs that consumers make when evaluating several attributes
together
measures preferences at the individual level
uncovers real or hidden drivers which may not be apparent to the respondent themselves
realistic choice or shopping task
able to use physical objects
if appropriately designed, the ability to model interactions between attributes can be used to
develop needs based segmentation
Disadvantages]
designing conjoint studies can be complex
with too many options, respondents resort to simplification strategies
difficult to use for product positioning research because there is no procedure for converting
perceptions about actual features to perceptions about a reduced set of underlying features
respondents are unable to articulate attitudes toward new categories, or may feel forced to
think about issues they would otherwise not give much thought to
poorly designed studies may over-value emotional/preference variables and undervalue
concrete variables
does not take into account the number items per purchase so it can give a poor reading of
market share