Conjoint Analysis with Example

Topics: Least squares, Mobile phone, Regression analysis Pages: 3 (473 words) Published: March 27, 2011

Mobile Phones

1. DEFINITION: Satisfying customers’ wishes is a challenge for many companies in the today’s rapidly changing and keenly competitive environment. A thorough knowledge of customer needs is even considered to be the foundation on which a company is built. Conjoint analysis means constructing and conducting particular experiments among consumers in order to model their decision making process. As the name suggests, potential customers are asked to make judgments about the attributes that affect their purchase decisions conjointly, rather than evaluate each attribute individually. Analysis allows finding out which product attributes create most value to a customer and how customers are likely to react to different product configurations. This information can lead to the creation of optimal value propositions.

2. CONJOINT ANALYSIS: To study conjoint analysis, I am taking the example of mobile phone attributes mainly: Color, Memory, and Delivery. Color| Red, Green|
Memory| 16MB, 64MB|
Delivery| 1Day, 1Week|

RED| +1|
GREEN| -1|
16MB| -1|
64MB| +1|
1DAY| +1|
1WEEK| -1|
Since every attribute has two values (example either Red, Green), we assign levels either -1 or +1 to each of them. Example, we have assigned following levels to various attributes variation:

Now we make (2^3) concept cards of all possible combinations of the above attributes as shown Green, 16MB, 1Week|
Red, 16MB, 1Week|
Green, 64MB, 1Week|
Red, 64MB, 1Week|
Green, 16MB, 1Day|
Green, 64MB, 1Day|
Red, 16MB, 1Day|
Red, 64MB, 1Day|

Now the next step is to give these 8 cards to consumers, and ask them to rank these from Rank 1 to the most preferred to rank8 to least preferred. FOR CUSTOMER 1
Green, 16MB, 1Week| 8|
Red, 16MB, 1Week| 7|
Green, 64MB, 1Week| 4|...
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