Conjoint analysis allows the researcher to analyze the trade-offs that people make in purchasing a product. It is commonly used to design products/services and used to create advertising messages that will be most persuasive and provide the best returns on investment.
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As consumers, we always make trade-offs. Comfort, travel time, price are features dear to a regular flyer, and the price for this comfort and travel time may have a very high utility value. It is therefore important for marketers to understand the utility value of a feature that may impact choice of a specific airline.
Marketers can also use utility values to design products and/or services that satisfy the needs based on utility weight age provided by specific population segments. In its entirety this technique, therefore, can be used to identify market opportunities by exploring the potential of product feature combinations that are not currently available.
In addition to providing information on the importance of specific product features, it also provides the opportunity to conduct computer choice simulations. Choice simulations identify successful and unsuccessful products and services before they are introduced to the market. Simulations allow the marketer to estimate preference, sales and share for new products and services before they are introduced to the market. Price simulations can also be conducted to determine the sensitivity of the consumer to changes in prices and possible disturbances caused due to price distortions.
From Full profile studies to Hybrid Conjoint this technique has seen an evolution over the years. Today the technique has evolved from ranking and rating to make actual choices in the real life situation. Choice based conjoint and discrete choice analysis is some of the techniques applied today together with Hierarchical Bayesian Techniques to reveal individual level utilities and value.
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Conjoint analysis is frequently used by marketers in the following areas:
- New product/service design and Positioning Studies
- Advertising effectiveness and Brand Equity Studies
Conjoint analysis techniques are also referred to as multi-attribute compositional modeling, discrete choice modeling and form part of a broader set of trade-off analysis tools used for systematic and informed decision making.