STAT8019

Tutorial 5

Review

Objective
• Conjoint analysis is used to study the preferences for (possibly hypothetical) products and services.
• It uses an analysis of variance (ANOVA) or regression model to investigate how subjects trade-off
product attributes when making purchasing decisions.

Additive model
• Preference is the sum of the part-worth
o The higher the part-worth, the more impact it has on overall utility
o Part-worth values can be plotted graphically to identify patterns

• Estimation of part-worth
o Multiple regression
o ANOVA when all factors are categorical
o Part-worth = level average rate – overall average
o In general
𝛼
𝐘 = 𝐗$ '
𝐮
𝛼 !
$ '= (𝐗 𝐗)"# 𝐗 ! 𝐘
𝐮
§ Y is the preference vector, X is the design matrix, a is the intercept and u is the part-worth.

• Relative importance of each factor

o Range of part-worths of a factor divided by the sum of the ranges

• Calculate share of preferences

o Maximum utility (first choice) model
§ Assumes the respondent chooses the stimulus with the highest predicted utility score
o Bradford-Terry-Luce (BTL) model
share (x j ) = U (x j ) åU (xi )
i
o Logit model
[
share(x j ) = Exp U (x j )] å Exp[U (x )]
i
i

1
Exercises

1. A study was conducted to evaluate the preference of purchase of a motor vehicle product with
specific combinations of components from the home country. Two components were considered
which were Engine and Body design and three countries were considered which were Australia,
Japan and Germany.

Factor Levels
Engine 1=Australian, 2=Japanese, 3=German
Body design 1=Australian, 2=Japanese, 3=German

The rating of a customers on 9 profiles are given in the following. The higher the rating, the more
the customer prefers.
Engine Body design Rating
Australian Australian 17
Australian Japanese 12
Australian German 9
Japanese Australian 14
Japanese Japanese 22
Japanese German 15
German Australian 16
German Japanese 11
German German 10

a. Calculate the part-worth of all the levels.

b. Calculate the relative importance of all factors.
c. Calculate the market share of the following profiles.
Vehicle 1: Australian engine and Japanese body design
Vehicle 2: Japanese engine and German body design

2. A product of tire is characterized by four factors: Brand, Price, Life and Hazard. To study the
preference of a consumer to the tire, 18 hypothetical tires are designed and a consumer is asked to
rate the preference to these tires. The value of 1 means that the tire is not preferred while the value
of 18 means that the tire is the most preferred. The factors and their levels are presented in the
following table:
Factor Levels
Brand Goodstone, Pirogi, Machismo
Price $69.99, $74.99, $79.99
Life 50,000, 60,000, 70,000
Hazard Yes, No

The data file is “TUT10_02.CSV”. Conduct the conjoint analysis to study the preferences.
a. Comment on the fitness for Subj1.
b. Report the part-worth utilities for Subj1.
c. Report the importance of the factors for Subj1.

2
d. Predict the market share of the following profiles.

Brand Price Life Hazard

Goodstone $79.99 60,000 Yes
Pirogi $74.99 70,000 No
Machismo $69.99 50,000 Yes

e. Study the similarity of their preference and determine which factors are essential to them.