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Conjoint Analysis

Conjoint Analysis. Wes Friske Xinchun Wang. Overview. Definition History Formula Example for class SAS Demonstration Examples from multiple disciplines Question and answer session. SUMBER: courses.ttu.edu/isqs6348.../ Conjoint Analysis . ppt ‎Texas Tech University. Definition.

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Conjoint Analysis

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  1. Conjoint Analysis Wes Friske Xinchun Wang

  2. Overview • Definition • History • Formula • Example for class • SAS Demonstration • Examples from multiple disciplines • Question and answer session SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  3. Definition Conjoint Analysis (kuhn-joint uh-nal-uh-sis): • “Conjoint analysis is a multivariate technique developed specifically to understand how respondents develop preferences for objects (products, services, or ideas).” • Source: Hair, Black, Babin, and Anderson (2009) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  4. More on Conjoint Analysis • Conjoint analysis can be used in almost any area in which decisions are studied. • Conjoint analysis assumes that any set of objects (e.g., brands, companies) or concepts (e.g., positioning, images) is evaluated as a bundle of attributes. • Most conjoint analysis studies use experimental designs. • Conjoint analysis is an exploratory technique; it is not used in theory testing. • It can accommodate either a metric or non-metric dependent variable. • Independent variables must be non-metric. • Sources: Hair et. al (2009) and Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  5. History • Conjoint analysis grew out of conjoint measurement in mathematical psychology. • Green and Rao (1971) and Rao and Wind (1975) were some of the first academics to use conjoint analysis in a business context—marketing research. • During the 1980s, conjoint analysis gained widespread acceptance in many industries, with usage rates increasing up to tenfold. • By the end of the 1990s, many other disciplines had adopted conjoint analysis techniques. • Sources: Hair et. al (2009) and Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  6. Formula SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  7. An Interactive Example • For this example, suppose that you have asked someone to rate his/her preferences for eight chocolate candies using a nine-point Likert scale (with 1 = low preference, 9 = high preference). • To complicate matters, the chocolate bars are all different. Their exteriors are made of either dark chocolate or milk chocolate; their fillings are chewy or soft; and some contain nuts, others do not. • Your experiment is thus a full factorial (2 X 2 X 2) design. • Conjoint analysis is used to determine the importance of each attribute and the respondent’s preferences for each type of chocolate candy. • Source: Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  8. SAS Code • In SAS, PROC TRANSREG is used to perform metric and non-metric conjoint analysis. • The “separators = option” is used in constructing the labels for the part-worth utilities in the displayed output. • The “short” option means that the iteration history will not be included in the output. • Variable lists are specified in parentheses after a transformation name. • A transformation name must be specified for all variable lists, even when no transformation is desired. • An equal sign follows the dependent variable specification, then the attribute variables are specified along with their transformation. • The following specification designates the attributes as class variables with the restriction that the part-worth utilities sum to zero within each attribute: “class (chocolate center nuts / zero = sum)”. • A slash must be specified to separate the variables from the transformation option “zero = sum”. • Source: Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  9. SAS Output • The part-worth utilities show the most and least preferred levels of the attributes. • Levels with positive utility are preferred over those with negative utility. • The total utility for a candy (i.e., the respondent’s overall preference for a candy) is the sum of the intercept and the part-worth utilities. • Source: Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  10. Conjoint Analysis in Marketing In marketing, conjoint analysis has been used in… • New product development • Price sensitivity studies • Segmentation • Profitability analysis. • Sources: Hair et. al (2009) and Kuhfeld (2010) SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  11. Conjoint Analysis in Other Disciplines Accounting: Chalos, Cherian, and Dawn (1991), Contemporary Accounting Research • Conjoint analysis was used to investigate the role of financial information disclosure on union-management preferences for labor contract outcomes. Economics: Ryan and Hughes (1998), Health Economics • Conjoint analysis was applied to assess women's preferences for the management of miscarriage. Finance: Zinkhan and Zinkhan (1994), Managerial Finance • Conjoint analysis was used to measure managers’ utility functions regarding innovative capital budgeting proposals. Management: Priem (1992), Strategic Management Journal • Conjoint analysis was used to examine the strategy-structure-environment alignment decision rules of 33 CEOs. Range, Wildlife, and Fisheries Science: Belkner, Dennis, Kittredge, and Willis (2000), Ecological Economics • Contingent valuation (CV) and conjoint analysis were used to estimate landowner’s willingness to pay (WTP) for ecosystem management on non-industrial private forest land. Supply Chain Management: Thun (2010), Journal of Supply Chain Management • Conjoint analysis was used to examine the alignment of supply chain integration and IT integration strategies. SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  12. A Quiz (in honor of Dr. Westfall) • In the candy bar example, what is the most important attribute of the candy bar, according to the respondent? • Does the respondent prefer a chewy center or a soft center in the candy bar? • What is the predicted utility of the dark/soft/no nuts combination? • How close is this value to the respondent’s actual rating of the dark/soft/no nuts candy bar? SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

  13. References • Hair, Joseph Jr., Black, William, Babin, Barry, & Anderson, Rolph. (2009). Conjoint analysis. Multivariate Data Analysis. New York: Prentice Hall. • Kuhfeld, Warren. (2010). Conjoint analysis. Marketing Research Methods in SAS. Cary, NC: SAS Institute Inc. SUMBER: courses.ttu.edu/isqs6348.../ConjointAnalysis.ppt‎Texas Tech University

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