Consumer Behavior Conjoint analysis Conjoint Analysis.
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Transcript of Consumer Behavior Conjoint analysis Conjoint Analysis.
Consumer BehaviorConsumer BehaviorConjoint analysis
Conjoint AnalysisConjoint Analysis
Consumer BehaviorConsumer BehaviorConjoint analysis
Outline
• Basic idea of conjoint analysis• Steps in conjoint analysis• Uses of conjoint analysis
Consumer BehaviorConsumer BehaviorConjoint analysis
Basic idea• Overall utility for a product can be decom-
posed into the utilities (called part-worths) associated with the levels of the individual attributes of the product;
• The relative importance of a given attribute is given by the ratio of the part-worth range for that attribute divided by the sum of all part-worth ranges;
Consumer BehaviorConsumer BehaviorConjoint analysis
Steps in conjoint analysis
• Determine attributes and attribute levels
• Select product profiles to be measured
• Choose a method of stimulus presentation
• Decide on the response method
• Collect and analyze the data
• Interpret the results
Consumer BehaviorConsumer BehaviorConjoint analysis
Attributes and attribute levels• Identify the relevant product attributes that
are considered during choice
• Select attribute levels that represent the options actually available in the market
• Trade-off between the completeness of the representation and the complexity of the design
Consumer BehaviorConsumer BehaviorConjoint analysis
Product profiles• Full factorial designs:
all possible combinations of the levels of the various attributes
• Fractional factorial designs: –subset of all possible combinations–orthogonal designs in which each level of one attribute is paired equally with all the levels of other attributes
Consumer BehaviorConsumer BehaviorConjoint analysis
Example: Laptop ProfilesBrand Hard Drive RAM Screen Price A B
Dell 320 GB 2 GB 15.4 in $1,200 9 6
Apple 320 GB 4 GB 15.4 in $1,200 6 12
Dell 160 GB 4 GB 15.4 in $900 12 5
Apple 320 GB 2 GB 15.4 in $900 11 11
Dell 320 GB 4 GB 12.1 in $1,500 4 3
Apple 320 GB 2 GB 12.1 in $1,500 1 9
Apple 160 GB 4 GB 15.4 in $1,500 3 10
Apple 160 GB 2 GB 12.1 in $900 8 7
Apple 160 GB 4 GB 12.1 in $1,200 5 8
Dell 160 GB 2 GB 12.1 in $1,200 7 1
Dell 320 GB 4 GB 12.1 in $900 10 4
Dell 160 GB 2 GB 15.4 in $1,500 2 2
Consumer BehaviorConsumer BehaviorConjoint analysis
Methods of stimulus presentation
Apple LaptopApple Laptopwith 320 GB of Hard Disk Space,with 320 GB of Hard Disk Space,4 GB of Ram, and a 4 GB of Ram, and a Screen Size of 15.4 inches – Screen Size of 15.4 inches – at a Price of $1,200.at a Price of $1,200.
• Verbal descriptions
• Pictures
• Actual products or prototypes
Consumer BehaviorConsumer BehaviorConjoint analysis
Response method• Rankings or ratings of the product profiles in
terms of preference, purchase probability, etc.
• Pairwise comparisons of product profiles in terms of preference, purchase probability, etc.
• Choice of a product from a set of product profiles
Consumer BehaviorConsumer BehaviorConjoint analysis
In-class exerciseUsing the data in the table, answer the following questions:
(a) How much utility does each of the two consumers attach to the
different levels of the five attributes? (Hint: Compute each consumer’s
average rating of all the options with a given feature. For example, to
figure out how much consumer A values the Apple brand name, compute
the average rating of the six Apple laptops.)
(b) What’s the relative importance of the five attributes for the two
consumers?
(c) Consider consumer A’s ratings. For this consumer, what’s the
predicted utility of a Dell computer with 160 GB of hard drive space and 2
GB of RAM, a 12.1 inch screen, and a price of $1,200?
(d) How much could you raise the price if you increased the screen size
from 12.1 to 15.4 inches?
11.74
Consumer BehaviorConsumer BehaviorConjoint analysis
Uses of conjoint analysis• Market segmentation
Q: How would you segment the market using individual-level conjoint analysis output?
• New product design Q: How can conjoint analysis be used for new product design?
• Trade-off analysis (esp. in pricing decisions)Q: How much could the price of a Dell computer with 160 GB of hard
drive space and 2 GB of RAM, which currently sells for $1,200, be raised if the screen size were increased from 12.1 in to 15.4 in?
• Competitive analysisQ: How can conjoint analysis be used to simulate market shares?