SYMBIOSIS INSTITUTE OF BUSINESS MANAGEMENT PUNE

Assignment: Experiential Learning

Subject: Business Analytics of Marketing
Submitted by: Group 7
Submitted to: Prof. Vimal Bhatt

Name PRN
Aastha Ganjoo 21020141001
Aish Kharkwal 21020141011

Akriti Jain 21020141015

Debaswini Dey 21020141063
Madhusudan Shah 21020141116
Nandini Goyal 21020141140
Supratim Chatterjee 21020141226
Utkarsh Singh 21020141233
 Conjoint Analysis

Introduction to Conjoint Analysis:

Conjoint analysis is the best market research method for determining how much the
consumers appreciate the quality of a product or a service. This widely utilised method
combines real-life scenarios and statistical tools with market-decision modelling.

Conjoint analysis can help an organisation figure out more than just its pricing strategy:

1. Selection of product features: It can help it figure out how to market and sell its
products or services. When an organisation understands which qualities are the most
important to its customers, it may emphasise those features in its commercials,
marketing materials, and promotions.
2. Interest-based customer segmentation: A business may discover that its
customers attach varying values to certain qualities. Conjoint analysis can be an
effective tool for segmenting clients based on their interests and how they value
characteristics in this situation, allowing for more targeted marketing.
3. Evaluate sensitivity to price: Conjoint analysis can be used to evaluate how the
sales of a product varies with the change of price per unit. As a result, finding an
optimum price-point is easier using this method.
4. Adaption of new product/services: By assessing relative importance of product
attributes and testing the impact of new product features, conjoint analysis gives a
data-driven idea of how the newly launched product/service might perform in the
market and how widely it will be adapted by the customers.

For example, a chocolate-selling online company might discover through conjoint analysis
that two elements are most important to its customers: quality and the fact that a portion of
each transaction goes toward environmental sustainability efforts. The organisation can
then utilise that data to send different messages and appeal to the unique value of each
section of its target customer.

Fig 1: Application of Conjoint Analysis in Marketing Research

Chosen industry: E-commerce

Problem in the industry:

The online customer satisfaction is directly dependent on the customer experience while
shopping for a product. The buying experience is a critical determinant in whether the
customer will decide to repurchase from the platform or move to other alternatives.

This is calculated in the form of Net Promoter Score [NPS] in the e-commerce industry.
Globally, an NPS of ~45 is considered to be a good number for e-commerce companies.
[Retently, 2021] But this shows that there is scope to further improve and provide a more
satisfying experience to the customers. Companies like Flipkart and Amazon are trying to
improve their NPS numbers. Conjoint analysis can be used to tackle the problem.

Use case of how Conjoint Analysis solves it:

Let us consider the top features that users look for in an online shopping experience.

Convenience :
Convenience is frequently shown to be the most significant factor of retail stores as well as
some other types of buying, such as catalogue and Internet shopping. E-commerce allows
individuals to save time and effort by making it simple to obtain the needful. Customers
should be able to discover products or information quickly on B2C websites.

The general ease of discovering a product, the time spent browsing, post-purchase
assistance, comprehensive contact information, and the minimisation of overall
purchasing effort are all examples of convenience. The following characteristics will be
analysed for convenience:
(1) General ease and enjoyment of the buying experience
(2) Post-purchase customer support
(3) The ability to search up specific product information and compare price

Trust :
The customer must trust the abilities of the merchant and its IT systems . Part of a buyer's
decision is dependent on their faith in the product, salesperson, or company. Customers
and merchants, as well as their computer systems, must trust one other while purchasing on
the internet. Integrity demonstrates the honesty and sincerity of an E-commerce company.
In order for trust to exist, the online customer must believe that the online business is
trustworthy and dependable. The following features are evaluated in this analysis :
(1) The customer's trust in the merchant and their computer system
(2) The E-commerce merchant's perceived reliability and integrity
(3) The overall minimization of the customer's worries and regrets.
Delivery:
Customers must be informed of any delays in order to avoid disappointment if the delivery
deadline is missed. Expectations must be met in order to fulfil customer-satisfaction. The
following are the characteristics of the attribute delivery time that will be analysed:
(1) Overall delivery time minimization
(2) Notifying customers of any potential shipping delays
(3) Providing consumers with a tracking number for their product

With so many different categories of factors affecting the e-commerce industry, conjoint
analysis will be helpful in finding the relative value that consumers put on the above features,
and thereby, to increase their customer satisfaction and NPS. For example, based on the above
factors, Choice-based Conjoint Analysis (CBC) can be used to figure out the right set of
convenience, trust, and delivery features that the consumers are looking for to maximise their
satisfaction scores. Similarly, two-attribute trade-off analysis can be done to balance
between some of the convenience features, like quick delivery, with supply chain costs. As
companies undertake Full-profile Conjoint Analysis, they can figure the pareto problems in
their NPS numbers and the top features contributing to those. They can utilise their resources to
correct those features and improve their NPS.

Fig 2: Conjoint Analysis of a E-commerce Customer Satisfaction attributes

 Logistic Regression

Introduction to Regression Analysis:

Logistic regression is a method for predicting a discrete result based on discrete,

continuous, or mixed inputs. Thus, logistic regression is a regularly utilised technique when
the dependent variable comprises two or more distinct outcomes. Given a collection of
independent variables, the outcome could be Yes/No, 1/0, True / False, High/Low. The
use of logistic regression covers a wide range of applications.

Logistic Regression Model:

Fig 3: Logistic Regression Model

A model of the link between a continuous predictor and the likelihood of an event or
result is depicted in the graph. If this is the genuine connection between X and probability,
the linear model simply does not fit. You'll need a nonlinear function to directly model
this relationship. One such function is depicted in the graph. The function's S-shape is
referred to as sigmoid.

Chosen Industry: E-commerce

Problem in the industry:

With the advancement and widespread adoption of Internet technology, the e-commerce
platforms have offered customers with satisfaction and developed client loyalty.
Nonetheless, in the corporate world, user loss is still a hot topic. The problem of predicting
e-commerce client attrition [or customer churn rate] has its unique peculiarities. The e-
commerce platform is unable to determine whether the user is truly lost, significantly
increasing the difficulty and complexity of prediction.
Use Case of Logistic Regression:

With the fast expansion of e-commerce users, predicting the likelihood of customer
churn has become a pressing issue for e-commerce platforms.
User attention to buy, browsing rate of recommended information, demand for the
sharing function, number of online times per day, and duration of daily online are all
critical elements affecting e-commerce platform user churn, and can have a significant
impact on forecast accuracy. Decision tree, Artificial neural network, Logistic
regression model, K-Means algorithm, Naive Bayes, and other algorithms are currently
used to forecast user churn.

The prediction of e-commerce platform customer attrition is a typical dichotomy problem.

Rather than classifying user behaviour explicitly, the prediction outcomes are the likelihood
of being retained or lost. Logistic regression is a common statistical analysis method for
classification that can produce probabilistic prediction findings that can be used to predict
e-commerce platform customer turnover.

Using Logistic Regression:

In e-commerce, predicting customer turnover is one of two apparent categorization

challenges. Logistic regression is a generally used statistical analysis method that may be
used for classification, prediction outcomes, and probability, and it is a sort of nonlinear
regression that is based on probability. If the conditional probability P(z) = p is based on
the likelihood of an observation in relation to an event, the logistic regression model can be
written as follows:

The range is [0,1], thus we may estimate the likelihood that the variable P = 1 is based on
its value because the result of the prediction is yes or no between the two options.

The basic idea behind maximum likelihood estimation, also known as Maximum
Likelihood Estimation, is that if the model group n were randomly chosen from the total
sample observations, the most reasonable parameter estimates from the model should
maximise the probability of extracting the n group sample observation value.

This is an iterative algorithm that uses an estimate value as the initial value of the
parameters, then uses the algorithm to determine the direction and change of parameters to
increase the log likelihood value, estimate the initial function, test the residuals, and
reestimate the residuals until the log likelihood value no longer changes significantly.
This is no longer the case because the answer is more sophisticated, and the application of
the SPSS programme is normally calculated using the SPSS software. Finally, by
inserting the acquired parameters, a logistic regression prediction model can be created.

Extracting Characteristic Factors :

We examine ecommerce user behaviour, utilise plausible logical induction to merge and
change the original properties of ecommerce users, and extract the following characteristics
as model factors:
1. The rate of user's interest in e-stores: The user's interest rate for the store refers to
how much attention the user gives to the e-commerce store, as measured by how
many times the user clicks into the shops of interest.
2. Recommended CTR: A user is presented with a range of information, the majority
of which is tailored to the individual's specific needs. The more a person clicks on
the recommended options, the more information E-commerce platforms gain about
the consumer.
3. Share rate: When consumers share an ecommerce platform, they are indicating
which products or activities on the platform are their favourites. They imply that
consumers are supporting an e-commerce site when they share with a third-party
platform. This increases the likelihood of retention.
4. User churn time: The login frequency of the user in an e-commerce platform
during three months is the criteria for establishing whether a user is truly missing.
This is where the user churn time becomes really integral.

Result Analysis:
A classifier is constructed to classify the categories of users belonging to an e-commerce
user, and the retention rate of e-business users is predicted. When a classifier's performance
is measured, the following metrics are commonly used:
● Accuracy: Predict the ratio of the correct sample size to the total sample size.
● Precision: Predict the ratio of the correct sample number to the total sample
number in the state.
● The full rate: Predict the correct sample number to the real sample ratio.
● The rate of omission: The ratio of the sample size of the prediction error to the
overall sample number.

Hence, using logistic regression, historical behaviour of a consumer on an e-commerce

platform can be analysed to determine, with certain degree of accuracy and precision, the
probability of their churning. For example, a customer who has lower CTR on the
platform, low share rate, high churn times is more likely to churn than a customer whose
past data suggests more loyal behaviour. Companies can use these data points to build
predictive logistic models that would help them proactively detect and reduce the chances
of churning through targeted ads, additional offers, and nudges.