Article by Patrick Fiorenza, RMS Director of Research Analytics –
Conjoint Analysis is a tool to help determine how people value different features of a product or service. Conjoint Analysis can be used for product design, pricing strategies, market segmentation, or in a competitive analysis. Conjoint Analysis can help reveal purchasing behaviors as well as help identify the optimal combination of product features. For example, if you’re analyzing televisions, you might want to look at attributes like screen size, built-in apps, speaker quality, and screen resolution, then identify which is the most optimal combination for potential consumers.
One of the keys to proper use of Conjoint Analysis is first identifying the different combinations and attributes to measure. You will want to create a choice set that simulates the decision the consumer will be making in the real world. You then can use a survey to ask potential consumers to choose between the different profiles. As individuals debate the choices, they naturally will be making trade-offs on features. During analysis, a researcher can then identify which combination of choices is preferred.
To help contextualize how this works, take a look at the table below which forces the consumer to think about the trade-offs. The consumer could purchase a 55-inch TV for $800, or the same size TV for $1,200, but with more HDMI and 8K, instead of 4K. Or they could buy a nearly identical TV, but based on Roku or Android smart technology. You can imagine how these distinctions are important to understand when thinking about segmentation data, tailoring market messages, or making sure your go-to market strategy is correct. This is a very simplified example, but hopefully it gives you some idea of how Conjoint Analysis can be used.
Analyze & Interpret the Data
If we were to actually test our simplified example above, RMS would use a statistical model to analyze the survey responses and look at an estimation of part-worth utilities. In Conjoint Analysis, part-worth utilities is a value assigned to each attribute level based on survey responses. With this data in hand, you can now see which attributes are most important to consumers, and how they impact decision making. You can also tell how different changes impact consumers’ purchasing. In addition, you can do some market simulations to predict behavior with different conditions.
If you’ve done Conjoint Analysis before, this may all sound familiar. If you’re new to Conjoint Analysis, RMS, as a third-party market research vendor, can help you design this type of study and analyze the data. The bottom line is that as your market research partner, our job is to find the right method to answer your questions, providing you with the information you need to know to make the right decisions. That path might lead you to conduct a Conjoint Analysis, or another methodology that could be more appropriate.
Is Conjoint Analysis Right for You?
There are various models of Conjoint Analysis you can use: choice-based Conjoint Analysis, adaptive Conjoint Analysis, or discrete choice experiments – but it’s important that you work with your vendor to understand your goals and objectives to make sure that Conjoint Analysis will yield the best results. Let the vendor determine the right methodology and approach, while you can help by providing important context on what insights you are seeking to understand. Conjoint Analysis may be particularly beneficial in cases where you are:
- Designing a new product
- Considering pricing strategies
- Understanding market segments behaviors
- Conducting a competitive analysis to evaluate your product against competitors (i.e., identifying your value proposition or areas of differentiation).
Conjoint Analysis is a powerful tool for companies to help them best understand consumer behaviors and preferences. Using Conjoint Analysis, your team can optimize features and make well-informed decisions that can enhance consumer satisfaction, improve market positioning, and support your overall growth.
About the Author – Patrick Fiorenza
Patrick brings years of market research experience to the RMS Research Analytics team. His preliminary focus encompasses designing, implementing, gathering, and analyzing results from proven research methods created to obtain credible data to help guide decision-making across a variety of industries.
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About RMS
Research & Marketing Strategies, Inc. (RMS) is a full-service market research firm in Central New York. Formed in 2002, RMS helps organizations that are looking to know more about their customers and/or potential customers. We conduct surveys, focus groups, mystery shopping, studies, and analyses. Each project is customized and gets personal attention so that actionable, data-driven findings are delivered. RMS has a reputation for getting results. We offer an independent, professional means to conduct telephone, on-line, and mail surveying, as well as in-depth interviews, intercept interviews, and participant recruitment. We also host discussion groups through QualiSight, our onsite call center and focus group facility. We have a proven reputation for successfully recruiting and moderating focus groups, community forums, and town meetings.
