Conjoint analysis is a tool used to measure buyer preferences by evaluating combinations of product attributes rather than individual factors. This helps businesses understand consumer trade-offs and make more informed decisions when introducing or changing a product.
What Is Conjoint Analysis?
Conjoint analysis helps measure consumer preferences by presenting various combinations of product attributes and asking customers to rank them. The analysis identifies which combinations of features are most important to customers, providing insight into what they are willing to trade off to get their desired attributes.
Example: A typical preference survey might rank attributes such as price, service, and location. Conjoint analysis would reveal how different combinations of these attributes (e.g., service and price vs. service and location) impact consumer preferences.
Steps for Conducting a Conjoint Analysis
Step 1: Identify Product Attributes to Study
Start by identifying key product attributes to evaluate. For example, a glass cleaner might have the following attributes:
- Format
- Price
- Scent
- Ingredients
- Promotion
Step 2: Choose Options for Each Attribute
For each attribute, choose a set of options that represent realistic alternatives:
- Format: Spray, Foam, Wipes
- Price: $2.49, $2.69, $2.99
- Scent: Unscented, Floral, Lemon
- Ingredients: Organic, Chemical
- Promotion: Buy 2 get 1 free, $1.00 off coupon
Step 3: Select Attribute Combinations to Evaluate
Since evaluating every possible combination is unrealistic, select a representative sample. For example, the glass cleaner company might choose 12 different combinations for respondents to rank.
Example of Attribute Combinations
| Design | Format | Price | Scent | Ingredients | Promotion |
|---|---|---|---|---|---|
| A | Spray | $2.49 | Unscented | Organic | Buy 2 get 1 free |
| B | Foam | $2.49 | Lemon | Chemical | Buy 2 get 1 free |
| C | Wipes | $2.49 | Unscented | Organic | Buy 2 get 1 free |
| D | Spray | $2.69 | Floral | Chemical | $1.00 off |
| E | Foam | $2.69 | Lemon | Organic | Buy 2 get 1 free |
Step 4: Present Attribute Combinations
Present the selected combinations to respondents in an understandable way. You can use:
- Grids or charts
- Paragraph descriptions
- Pictures or prototypes
Tip: Ensure that respondents clearly understand what they are ranking.
Step 5: Analyze and Interpret the Data
Once the rankings are collected, use statistical analysis to determine the “utility” values of each attribute. Utility measures how strongly consumers prefer one attribute over another.
Example Findings:
- The top four choices in a sample might all be wipes, with the top three being organic options.
- Consumers may prioritize certain attributes over others, such as format and ingredients.
Key Insight: Understanding these trade-offs can help businesses determine which product attributes to focus on when making decisions.
Key Points
- Purpose: Conjoint analysis reveals the value consumers place on different product attributes.
- Methodology: It involves designing an experiment, analyzing data, and using the insights to make business decisions.
- Decision Making: Businesses use conjoint analysis to identify the most appealing and profitable product attribute combinations.
By using conjoint analysis, companies can make better-informed, less risky decisions when introducing new products or modifying existing ones. This technique ensures that businesses develop products that align more closely with consumer preferences.
