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Conjoint
Analysis
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- Conjoint
analysis is a useful tool in predicting choice behavior.
It is a versatile marketing research technique that
can provide valuable information for new product development
and forecasting, market segmentation and pricing decisions.
This technique can be used to address numerous questions
including:
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- Which
new products will be successful?
- Which
features or attributes of a product or service drive
the purchase decision?
- Do
specific market segments exist for a product?
- What
advertising appeals will be most successful with these
segments?
- Will
changes in product design increase consumer preference
and sales?
- What
is the optimal price to charge consumers for a product
or service?
- Can
price be increased without a significant loss in sales?
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- Conjoint
analysis provides insight and understanding as to
how individuals value features (or "attributes")
of products or services by determining their tradeoffs
between different "levels" of those features.
Conjoint analysis examines these tradeoffs to determine
the combination of attributes that will be most satisfying
to the consumer. In other words, by using conjoint
analysis a company can determine the optimal features
for their product or service.
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- In
addition to providing information on the importance
of product features, conjoint analysis provides the
opportunity to conduct computer choice simulations.
Since conjoint quantifies the value of each product
feature it is possible to perform various "what
if" scenarios and estimate preference levels
of hypothetical products. Simulations such as these
are very useful in determining potential market share
of products or services before they are introduced
to the market!
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- In
sum, the value of conjoint analysis is that it predicts
what products or services people will chose and assesses
the weight people give to various factors that underlie
their decisions. As such, it is one of the more powerful,
versatile and strategically important research techniques
available.
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