Marketing Research

Aaker, Kumar, Day

Ninth Edition
Instructors Presentation Slides

Chapter Twenty-two

Multidimensional Scaling and

Conjoint Analysis

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Multidimensional Scaling
Used to:
Identify dimensions by which objects are perceived or
evaluated
Position the objects with respect to those dimensions
Make positioning decisions for new and old products

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Approaches To Creating Perceptual Maps

Perceptual map

Attribute data

Nonattribute
data

Similarity

Factor
analysis

Correspondence
analysis

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Discriminant
analysis

Preference

MDS

Attribute Based Approaches

Attribute based MDS - MDS used on attribute data
Assumption
The attributes on which the individuals' perceptions of objects are
based can be identified
Methods used to reduce the attributes to a small number of dimensions
Factor Analysis
Discriminant Analysis
Limitations
Ignore the relative importance of particular attributes to customers
Variables are assumed to be intervally scaled and continuous

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Comparison of Factor and Discriminant

Analysis
Discriminant Analysis
Identifies clusters of
attributes on which objects
differ

Factor Analysis
Groups attributes that are
similar

Identifies a perceptual
dimension even if it is
represented by a single
attribute

Based on both perceived

differences between objects
and differences between
people's perceptions of
objects

Statistical test with null

hypothesis that two objects
are perceived identically

Dimensions provide more

interpretive value than
discriminant analysis

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Perceptual Map of a Beverage Market

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Perceptual Map of Pain Relievers

Gentleness

. Tylenol
.
.
.

Bufferin

Bayer

Private-label
aspirin

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Effectiveness

Anacin

Advil
. Nuprin

Excedrin

Basic Concepts of Multidimensional Scaling

(MDS)
MDS uses proximities ( value which denotes how similar or how
different two objects are perceived to be) among different objects as
input
Proximities data is used to produce a geometric configuration of
points (objects) in a two-dimensional space as output
The fit between the derived distances and the two proximities in each
dimension is evaluated through a measure called stress
The appropriate number of dimensions required to locate objects can
be obtained by plotting stress values against the number of
dimensions

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Determining Number of Dimensions

Due to large increase in the stress values from two dimensions to

one, two dimensions are acceptable

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Attribute-based MDS
Advantages
Attributes can have diagnostic and operational value
Attribute data is easier for the respondents to use
Dimensions based on attribute data predicted preference
better as compared to non-attribute data

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Attribute-based MDS (contd.)

Disadvantages
If the list of attributes is not accurate and complete, the study
will suffer
Respondents may not perceive or evaluate objects in terms of
underlying attributes
May require more dimensions to represent them than the use of
flexible models

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Application of MDS With Nonattribute Data

Similarity Data
Reflect the perceived similarity of two objects from the
respondents' perspective
Perceptual map is obtained from the average similarity ratings
Able to find the smallest number of dimensions for which there is
a reasonably good fit between the input similarity rankings and
the rankings of the distance between objects in the resulting
space

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Similarity Judgments

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Perceptual Map Using Similarity Data

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Application of MDS With Nonattribute

Data (Contd.)
Preference Data
An ideal object is the combination of all customers' preferred
attribute levels
Location of ideal objects is to identify segments of customers
who have similar ideal objects, since customer preferences
are always heterogeneous

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Issues in MDS
Perceptual mapping has not been shown to be reliable across
different methods
The effect of market events on perceptual maps cannot be
ascertained
The interpretation of dimensions is difficult
When more than two or three dimensions are needed,
usefulness is reduced

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Conjoint Analysis
Technique that allows a subset of the possible
combinations of product features to be used to determine
the relative importance of each feature in the purchase
decision

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Conjoint Analysis
Used to determine the relative importance of various
attributes to respondents, based on their making trade-off
judgments
Uses:
To select features on a new product/service
Predict sales
Understand relationships

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Inputs in Conjoint Analysis

The dependent variable is the preference judgment that a
respondent makes about a new concept
The independent variables are the attribute levels that need to
be specified
Respondents make judgments about the concept either by
considering
Two attributes at a time - Trade-off approach
Full profile of attributes - Full profile approach

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Outputs in Conjoint Analysis

A value of relative utility is assigned to each level of an attribute
called partworth utilities
The combination with the highest utilities should be the one
that is most preferred
The combination with the lowest total utility is the least
preferred

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Applications of Conjoint Analysis

Where the alternative products or services have a number
of attributes, each with two or more levels
Where most of the feasible combinations of attribute levels
do not presently exist
Where the range of possible attribute levels can be
expanded beyond those presently available
Where the general direction of attribute preference
probably is known

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Steps in Conjoint Analysis

1.

Choose product attributes (e.g. size, price, model)

2.

Choose the values or options for each attribute

3.

Define products as a combination of attribute options

4.

A value of relative utility is assigned to each level of an attribute

called partworth utilities

5.

The combination with the highest utilities should be the one

that is most preferred

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Utilities for Credit Card Attributes

Source: Paul E. Green, A New Approach to Market Segmentation,

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Utilities for Credit Card Attributes

(contd.)

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Full-profile and Trade-off Approaches

Source: Adapted from Dick Westwood, Tony Lunn, and David Bezaley, The Trade-off Model and Its Extensions

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Conjoint Analysis - Example

Make

Price

MPG

Door

Domestic

$22,000

22

2-DR

Foreign

$18,000

28

4-DR

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Conjoint Analysis Regression Output

Model Summaryc
Model
1

R
.785b

R Square
.616

Adjusted
R Square
.488

Std. Error of
the Estimate
6.921

b. Predictors: Door, MPG, Price, Make

c. Dependent Variable: Rank
ANOVAc
Model
1

Regression
Residual
Total

Sum of
Squares
921.200
574.800
1496.000

df
4
12
16

Mean Square
230.300
47.900

F
4.808

a. Predictors: Door, MPG, Price, Make

c. Dependent Variable: Rank
Coefficientsa,b

Model
1

Make
Price
MPG
Door

Unstandardized
Coefficients
B
Std. Error
1.200
3.095
4.200
3.095
5.200
3.095
2.700
3.095

a. Dependent Variable: Rank

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through the Origin

Standardized
Coefficients
Beta
.088
.307
.380
.197

t
.388
1.357
1.680
.872

Sig.
.705
.200
.119
.400

Sig.
.015a

Part-worth Utilities

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Relative Importance of Attributes

Attribute
Make

Part-worth Utility
1.2

Relative
Importance
9%

Price

4.2

32%

MPG

5.2

39%

Door

2.7

20%

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Limitations of Conjoint Analysis

Trade-off approach
The task is too unrealistic
Trade-off judgments are being made on two attributes,
holding the others constant
Full-profile approach
If there are multiple attributes and attribute levels, the task
can get very demanding

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