How to Use Conjoint Analysis?
Conjoint Analysis Examples Tools and Templates
Each and every product and service is a bundle of different attributes such as design attributes, features, functionality and physical attributes. Every product or service attribute which drives the value for the customer is relevant and used in conjoint analysis.
Marketing research and marketing analysis by using conjoint analysis allow organizations to develop and market the products and services (the set of attributes) which satisfy the needs and wants of the target audience in the most effective and profitable way.
Examples of attributes used in conjoint analysis are product size, color, material and all the features and functionality. The basic process of conducting conjoint analysis starts by preparing the set of relevant product or service attributes. Various combinations of these attributes are generated which in turn creates a different potential products and services to be researched and analyzed.
By identifying and analyzing how the respondents from the target audience value different combination of attributes statistical and marketing analysts can determine the value of each individual component / attribute in those products and services and measure customer preferences.
The value of the individual components or attributes which are identified and measured by using this process are used for developing potential products and services as well as developing statistical and mathematical models which can be used to forecast and estimate the potential sales and market share of each product.
Conjoint analysis is a powerful marketing research approach and it is mainly used and applied as part of R&D and new product development.
By using this methodology companies can get an insight into potential success of various products even before launching any actual product in the marketplace. By selecting representatives of the target market audience this technique allows companies to study potential product launches in advance. This helps businesses improve the probability of success, save money by avoiding offerings which are not valued by the target market and develop the ideal positioning strategy in the marketplace.
Examples of conjoint analysis in marketing:
Any physical product can be broken down into individual components. As an example a computer can be defined as different set or bundles of attributes based on individual attributes like size (laptop, desktop, tablet), color, design, hard disc size, speed, easy of use, etc.
By combining these individual elements examples you can create a different combinations which are all potential products and services. Respondents have different preferences and weight on each of these attributes and the value of each potential product is analyzed.
Conjoint analysis is used in developing new services as well. For example a car wash service as an overall customer experience and quality of the service delivered can be broken down into many attributes like type of service (manual vs machine wash), time required for the entire process, waiting time for the customer, various materials which can be used in the process, locations, etc.
Again by using various attributes and developing different combinations businesses can create different potential services to be offered and marketed.
Conjoint analysis in marketing is very powerful and should be used by every company because the benefits are enormous and the risk of failing with new products and services is minimized substantially.
In product development as well as new market development is all about understanding the customer preferences, needs and wants and this is one of the best marketing analysis methodologies available to marketers.