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Conjoint Analysis

Conjoint Analysis. Conjoint Analysis. A method that examines a product as a whole. The notion being that the whole is greater than the sum of the parts. Examining attributes in isolation may lead to a limited understanding of how people will react to a product. Rating Task.

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Conjoint Analysis

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  1. Conjoint Analysis

  2. Conjoint Analysis • A method that examines a product as a whole. The notion being that the whole is greater than the sum of the parts. • Examining attributes in isolation may lead to a limited understanding of how people will react to a product.

  3. Rating Task Not At All Attractive 1 2 3 4 5 6 7 Very Attractive

  4. Choice Task

  5. Conjoint Analysis • Conjoint analysis permits: (1) an examination of tradeoffs people make; (2) a determination of interactions; and, (3) predict market shares.

  6. Conjoint Analysis: Terminology • Attributes • Features that describe a product. For example, frozen conentrate orange juice might be described by: price, pulp, blend and sweetness. • Attribute Levels • Price may be described on a continuous scale; pulp might be described as low or high; blend might be described as pure or mixed (e.g. orange-guava); and, sweetness might be described as high or low.

  7. Conjoint Analysis: Tradeoffs • How much would you pay for a new car? • Would it matter whether it was a Lada or a Rolls Royce? • How much more would you pay for a Rolls Royce? • Part of the impact may come from a main-effect.

  8. Conjoint Analysis: Main Effects • A main effect refers to the impact of changing levels of an attribute. • What is the impact of decreasing price by $5.00? • What would happen if we changed the colour from blue to red?

  9. Conjoint Analysis: Interactions • What would be the impact of increasing the price of a 6-pack of beer by $2.00? • Will the impact of this price increase be the same if it is Wildcat or Heineken? • “Kool-Aid” Example. • “Evenings and Weekends Free” Example. • The interaction between brand and attribute values may be examined.

  10. Conjoint Analysis Ratings Based Choice Based

  11. Conjoint Analysis Ratings Based Choice Based

  12. Conjoint Analysis: Ratings-Based Step 1: Determine Relevant Attributes Step 2: Determine Relevant Attribute Levels

  13. Conjoint Analysis: Ratings-Based Step 1: Determine Relevant Attributes Step 2: Determine Relevant Attribute Levels You want enough attributes and attribute levels to make the task realistic, but not enough to make the task explode. Exploratory research is particularly valuable in aiding this decision.

  14. Conjoint Analysis: Ratings-Based Step 3: Develop Experimental Design Step 4: Obtain Evaluations/Ratings.

  15. The world according to Fred.

  16. Equal to the “Price” column multiplied by the “Pulp” column.

  17. Note that this is due to the type of coding we used. If dummy coding had been used, a different method of coding for interactions would have to be employed. Only 2-way interactions are presented here. The same method would apply for the 3-way interactions and the 4-way interactions. Equal to the “Price” column multiplied by the “Pulp” column.

  18. Conjoint Analysis: Ratings-Based Step 7: Run Regression!

  19. The “magic” p < 0.05.

  20. Conjoint Analysis: Ratings-Based Step 8: Plot coefficients and/or calculate market share.

  21. Conjoint Analysis: Ratings-Based • Shares must be calculated by determining the choice that each person would have made in a given situation. • Do people typically make judgments in purchase situations?

  22. Conjoint Analysis Ratings Based Choice Based

  23. Conjoint Analysis: Ratings-Based Step 1: Determine Relevant Attributes Step 2: Determine Relevant Attribute Levels

  24. Conjoint Analysis: Ratings-Based Step 3: Develop Experimental Design Step 4: Obtain Evaluations/Ratings.

  25. Step 7: Put Into Survey

  26. Step 8: Another Regression! Multi-Nomial Logistic Regression (MNL)

  27. Step 8: Direct Estimation of Market Share

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