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Conjoint Analysis

  • 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:
  • 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?
  • 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.
  • 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!
  • 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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