Submitted by:

AMIT KUMAR
MINAKSHI ROY
MUKUL SINGH
VIBHANSHU KUMAR
Flow of contents…
Introduction
Definition
Conjoint analysis decision steps
Areas of application
Models
Concept exemplified
Examples
Advantage & Disadvantage
Introduction
Metric/ Non- metric responses conversion using an
interval scale
Examples-
This
This

OR
THIS
What is Conjoint Analysis
Research technique developed in early 70s

Measures how buyers value components of a

product/service bundle

Dictionary definition-- “Conjoint: Joined together,

combined.”

 Marketer’s catch-phrase-- “Features CONsidered

JOINTly”
Definition
Conjoint analysis is a statistical technique used in
market research to determine how people value
different features that make up an individual product
or service.
sometimes referred to as “trade-off” analysis because
respondents in a conjoint study are forced to make
trade-offs between product features.
Objective:- to determine what combination of a
limited number of attributes is most influential on
respondent choice or decision making.
Different Perspectives, Different Goals
Buyers want all of the most desirable
features at lowest possible price

Sellers want to maximize profits by:

1) minimizing costs of providing features

2) providing products that offer greater overall
value than the competition
Conjoint Analysis Contd…
It is a tool that allows a subset of the possible
combinations of product features to be used to
determine the relative importance of each feature
in the purchasing decision.
based on the fact that the relative values of
attributes considered jointly can better be
measured than when considered in isolation.
Conjoint Analysis Contd…
Today it is used in many of the social sciences and
applied sciences including marketing, product
management, and operations research.
It is used frequently in testing customer
acceptance of new product designs, in assessing
the appeal of advertisements and in service design.
It has been used in product positioning.
Conjoint Analysis Contd…
Measures consumer preferences for alternative
product concepts.
Helps derive utility value attached by customers to
the product attributes.
Hypothetical models proposition.
Helps estimate market share and profits
Contd.
Psychometrics
Marketing research
Conjoint is becoming very much removed from
theoretical roots i.e. hypothetical models to
Numerical measurement of behavior
Moving from non-metric to metric
Conjoint Research Problem

Analysis Define Stimuli (factors and levels)

Basic model form
Decision
Process Full profile Trade off Pairwise
Data Collection
Select preference measure
Survey Administration
This technique
Assumptions
requires a lot of
upfront work to Select estimation technique

think through the Evaluate results

design, data Interpret results
collection, and
Validate
analysis options.
Apply results
 Steps in Developing a Conjoint Analysis

1. Choose product attributes, for example, appearance, size,

or price.
2. Choose the values or options for each attribute. For
example, for the attribute of size, one may choose the
levels of 5", 10", or 20". The higher the number of options
used for each attribute, the more burden that is placed
on the respondents.
3. Define products as a combination of attribute options.
The set of combinations of attributes that will be used
will be a subset of the possible universe of products.
4. Choose the form in which the combinations of attributes
are to be presented to the respondents. Options include
verbal presentation, paragraph description, and pictorial
presentation.
 Steps in Developing a Conjoint
Analysis(cont…)
5. Decide how responses will be aggregated. There are
three choices - use individual responses, pool all
responses into a single utility function, or define
segments of respondents who have similar
preferences.

6. Select the technique to be used to analyse the

collected data. The part-worth model is one of the
simpler models used to express the utilities of the
various attributes. There also are vector (linear)
models and ideal-point (quadratic) models.
Areas of application
1. To find the product with the optimum set of
features
2. Determine the relative importance of each feature in
consumer choices
3. Estimate market share among products
4. Identify market segments
5. Evaluate the impact of price changes or other
marketing mix decisions.
 Three Main “Flavors” of Conjoint
Analysis

Traditional Full-Profile Conjoint

Adaptive Conjoint Analysis (ACA)

Choice-Based Conjoint (CBC), also

known as Discrete Choice Modeling
(DCM)
 Strengths of Traditional Conjoint
Good for both product design and pricing issues
Can be administered on paper, computer/internet
Shows products in full-profile, which many argue
mimics real-world
Can be used even with very small sample sizes

Weaknesses
o Limited ability to study many attributes (more
than about six)
o Limited ability to measure interactions and
other higher-order effects (cross-effects)
 Adaptive Conjoint Analysis
Developed in 80s by Rich Johnson, Sawtooth Software

Devised as way to study more attributes than was prudent

with traditional full-profile conjoint

Adapts to the respondent, focusing on most important

attributes and most relevant levels

Shows only a few attributes at a time (partial profile) rather

than all attributes at a time (full-profile)
 Strengths of ACA
Ability to measure many attributes, without wearing out
respondent
Respondents find interview more interesting and engaging
Efficient interview: high ratio of information gained per
respondent effort
Can be used even with very small sample sizes

Weakness
Partial-profile presentation less realistic than real
world
 Respondents may not be able to assume attributes not shown
are “held constant”

Often not good at pricing research

 Tends to understate importance of price, and within each
respondent assumes all brands have equal price elasticities
 Choice-Based Conjoint (CBC)
Became popular Choice-Based Conjoint Question
starting in early 90s

Respondents are shown

sets of cards and asked
to choose which one
they would buy

Can include “None of

the above” response, or
multiple “held-constant
alternatives”
 Strengths of CBC
 Questions closely mimic what buyers do in real world: choose from
available products

 Can investigate interactions, alternative-specific effects

 Can include “None” alternative, or multiple “constant alternatives”

 Paper or Computer/Web based interviews possible

Weaknesses
• Usually requires larger sample sizes than with CVA or ACA

• Tasks are more complex, so respondents can process fewer

attributes (CBC recommended <=6)

• Complex tasks may encourage response simplification strategies

• Analysis more complex than with CVA or ACA

Concept exemplified
Green & wind’s illustration
3 package designs (A,B,C)
3 brand designs (x, y, z)
3 prices (1,2,3)
Guarantee of the product (y/n)
Derive utility for all attributes b/w 0 to 1.
Higher utility stronger preference.
Factorial design combinations
(3*3*3*2)=54 combinations possible.
 A simple example
We want to market a new golf ball.
There are three important product features.
Average Driving Distance
Average Ball Life
Price

Average Driving Average Ball Life Price

Distance
275 yards 54 holes Rs. 70
250 yards 36 holes Rs. 80
225 yards 18 holes Rs. 92
• Obviously, the “ideal” ball from consumers’ view is:
– Average Driving Distance: 275 yards
– Average Ball Life: 54 holes
– Price: Rs. 70
• The “ideal” ball from manufacturers’ view is:
– Average Driving Distance: 225 yards
– Average Ball Life: 18 holes
– Price: Rs. 92
• Lose money selling the first, but consumers won’t be
happy with the second option.
 (Average life vs. Average distance)
Buyer 1 Both buyers agree on the
54 holes 36 holes 18 holes most and the least
275 1 2 4
yards
preferred ball.
250 3 5 6
But from other choices,
yards buyer 1 tends to trade-off
225 7 8 9 ball life for distance.
yards
Buyer 2 makes the
Buyer 2
opposite trade-off.
54 holes 36 holes 18 holes
The differences between
275 1 3 6
yards Figure 2 and 1 are the
250 2 5 8 essence of conjoint
yards analysis.
225 4 7 9
yards
 Simple Example of Conjoint Analysis
Product Cuisine Distance Price Preference
Option Rank Value Product Cuisine Distance Price Preference
Option Rank Value

1 Italian Near $10 ?

1 Italian Near $10 8
2 Italian Near $15 ?
2 Italian Near $15 6
3 Italian Far $10 ?
3 Italian Far $10 4
4 Italian Far $15 ?
4 Italian Far $15 2
5 Thai Near $10 ?
5 Thai Near $10 7
6 Thai Near $15 ?
6 Thai Near $15 5

7 Thai Far $10 ?

7 Thai Far $10 3

8 Thai Far $15 ? 8 Thai Far $15 1

 Designing a Frozen Pizza

Attributes
 Type of crust (3 types)  Topping (4 varieties)
 Type of cheese (3 types)  Amount of cheese (2 levels)
 Price (3 levels)

Crust Topping Type of cheese

Pan Pineapple Romano
Thin Veggie Mixed cheese
Thick Sausage Mozzeralla
Pepperoni

Amount of cheese Price

400 gm. Rs 300
600 gm. Rs. 200
Rs. 150

A total of 216 (3x4x3x2x3) different pizzas can be

developed from these options!
 Advantage
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
 Disadvantage
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
THANK YOU