Conjoint Analysis: Case 1

XYZ Paint Company identified the attributes which are important to their customers and also
classified each of the attributes into their levels. Based on this, they want to use the technique of
conjoint analysis to determine from a potential customers point of view, how important each
attribute is to him. They also want to know how much utility the customers derive from a given
combination of these levels of attributes. It also helps to understand the feasible offerings from
the marketer’s point of view. The three important attributes identified for the paint are:

1. Life: this is in one litre of paint.

2. Price: the price of one litre of paint.
3. Color: the color of paint.

The levels of the above mentioned attributes are as follows:

 Life: 3 yrs, 4 yrs, 5 yrs

 Price: Rs 50 per litre, Rs 60 per litre, Rs 70 per litre
 Color: Green, Blue, Cream

Price Ranking
Life( in (Rs/Litre . Nng
S.no yrs) ) Color (27 to1)
1 5 50 green 27
2 4 50 green 26
3 5 50 cream 25
4 5 50 blue 24
5 5 60 green 23
6 4 60 green 22
7 5 70 green 21
8 5 60 blue 20
9 5 60 cream 19
10 4 50 blue 18
11 4 50 cream 17
12 5 70 blue 16
13 3 50 green 15
14 5 70 cream 14
15 3 50 blue 13
16 4 60 blue 12
17 4 60 cream 11
18 3 50 cream 10
 19 4 70 green 9
20 3 60 green 8
21 4 70 blue 7
22 3 60 blue 6
23 4 70 cream 5
24 3 60 cream 4
25 3 70 green 3
26 3 70 blue 2
27 3 70 cream 1

Var1 Var2 Var3 Var4 Var5 Var6 Var7

-1 -1 1 0 1 0 27
0 1 1 0 1 0 26
-1 -1 1 0 -1 -1 25
-1 -1 1 0 0 1 24
1 -1 0 1 1 0 23
0 1 0 1 1 0 22
-1 -1 -1 -1 1 0 21
-1 -1 0 1 0 1 20
-1 -1 0 1 -1 -1 19
0 1 1 0 0 1 18
0 1 1 0 -1 -1 17
-1 -1 -1 -1 0 1 16
1 0 1 0 1 0 15
-1 -1 -1 -1 -1 -1 14
1 0 1 0 0 1 13
0 1 0 1 0 1 12
0 1 0 1 -1 -1 11
1 0 1 0 -1 -1 10
0 1 -1 -1 1 0 9
1 0 0 1 1 0 8
0 1 -1 -1 0 1 7
1 0 0 1 0 1 6
0 1 -1 -1 -1 -1 5
1 0 0 1 -1 -1 4
1 0 -1 -1 1 0 3
1 0 -1 -1 0 1 2
1 0 -1 -1 -1 -1 1
Output and its interpretation:

ANOVAb
Sum of
Model Squares df Mean Square F Sig.
1 Regression 1443.369 6 240.562 24.720 .000a
Residual 194.631 20 9.732
Total 1638.000 26
a. Predictors: (Constant), VAR00006, VAR00004, VAR00002, VAR00001,
VAR00003, VAR00005
b. Dependent Variable: VAR00007

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 14.463 .603 23.969 .000
VAR00001 -6.252 .818 -.653 -7.642 .000
VAR00002 -1.013 .801 -.106 -1.264 .221
VAR00003 4.981 .851 .522 5.852 .000
VAR00004 .815 .858 .085 .950 .353
VAR00005 4.037 .858 .423 4.708 .000
VAR00006 -1.352 .851 -.142 -1.588 .128
a. Dependent Variable: VAR00007
Utility Table:

Attributes Levels Part utility Range of utility

( Max- Min)
life 3 yrs -6.25 = 7.26- (-1.01)
4 yrs -1.01 = 8.28
5 yrs -6.25-1.01+X=0
X=7.26
Price Rs 50 per lt 4.981 =4.98 -(-5.7)
Rs 60 per lt .815 = 10.68
Rs 70 per lt X=-5.7
Color Green 4.037 =4.03- (-1.35)
Blue -1.352 = 5.38
cream X=-2.68

Interpretation:

Most imp attribute: Price

Second imp: Life, Third imp attribute: color

Combination utilities:

The total utility of any combination can be calculated by picking the attributes levels of our
choice.

For example, the combined utility of the combination 5 yrs of life, Rs 50 litres and Green
color is 7.26 +4.9+4.037 = 16.27.

Accordingly we can find the best combination.

Best combination is 5 yrs of life, Rs 50 litres and Green color

Next best is 5 yrs of life, Rs 60 litres and Green color . utility= 7.26+.815+4.037=12.117

Individual attributes:
Can find increase or drop in utility by comparing individual utilities of various levels.

Increase in yrs from 4 to 5, utility has increased from -1.01 to 7.26

Conjoint Analysis: Case 2

The marketing manager of Reynolds wants to know how the customer values tangible and
intangible features offered by its micro- tip pen. He identifies the attributes of his product which
are important to customers, then the level for each attribute that the company is willing to design
and offer to a customer. These are the following attributes of a micro tip pen, which are
considered to be important.

1. Price of the pen.

2. The color of ink in refill
3. Diameter of tip of the refill.

The levels of these attributes are:

 Price: Rs 5, Rs 7, Rs 10, Rs 12
 Color of ink: blue, black, red
 Diameter of tip: .25 mm, .45 mm, .5 mm

Since there are 4 ,3 n 3 levels of attributes, we get total of 4*3*3= 36 different combinations of
attributes levels.