Conjoint analysis

Statistical technique used in market research

Conjoint analysis is a statistical technique used in market research to determine how people value different attributes that make up an individual product or service. The method is used to understand the preferences of consumers and to predict their choices when presented with a set of options. Conjoint analysis is widely used in various fields, including marketing, product management, and healthcare.

Overview

Conjoint analysis involves presenting respondents with a set of products or services, each described by a number of attributes with varying levels. Respondents are asked to evaluate these options, often by ranking or rating them, or by choosing their preferred option from a set. The data collected is then analyzed to determine the relative importance of each attribute and the preferred levels of each attribute.

Example of conjoint analysis with ice cream attributes

The technique is based on the idea that products can be described by their attributes and that consumers' preferences are driven by these attributes. By understanding which attributes are most important to consumers, companies can design products that better meet consumer needs.

Methodology

Conjoint analysis typically involves the following steps:

1. Defining Attributes and Levels

The first step is to identify the attributes of the product or service that are relevant to consumers. Each attribute can have several levels. For example, in a study of ice cream preferences, attributes might include flavor, price, and brand, with levels such as chocolate, vanilla, and strawberry for flavor.

2. Designing the Study

A set of hypothetical products or services is created by combining different levels of the attributes. This set is presented to respondents in the form of a survey. The design of the study can vary, with common approaches including full-profile, choice-based, and adaptive conjoint analysis.

3. Collecting Data

Respondents are asked to evaluate the hypothetical products. This can be done by ranking, rating, or choosing between options. The choice-based conjoint analysis is particularly popular, where respondents choose their preferred option from a set of alternatives.

4. Analyzing Data

The data collected is analyzed using statistical techniques to estimate the part-worth utilities of each attribute level. These utilities indicate the value that respondents place on each level of an attribute. The analysis can reveal the relative importance of each attribute and predict how changes in attributes affect consumer preferences.

Sample output of conjoint analysis showing part-worth utilities

Applications

Conjoint analysis is used in various industries to inform product design, pricing strategies, and market segmentation. In healthcare, it can be used to understand patient preferences for different treatment options. In marketing, it helps in identifying the most appealing product features and optimal pricing.

Advantages and Limitations

Conjoint analysis provides a realistic way to measure consumer preferences and simulate market scenarios. However, it can be complex to design and analyze, and the results depend on the quality of the input data and the assumptions made during the analysis.

Related pages

• Market research
• Consumer behavior
• Product management
• Statistical analysis