Group 3

MODEL FOR
MARKETING STRATEGY

CONJOINT A
NALYSIS
INS3087-01
Lecturer: Dr. NGUYEN THI HONG
HANH
 Our Team Members
Do Thi Trang Nguyen Thi Tam

Nguyen Thi Khanh Huyen Nguyen Minh Hien

Le Thi Diem Quynh

Overview

Introduction to the
Conjoint analysis
• Conjoint analysis is a survey-based statistical technique. In
market research, it is used to determine how people value
different attributes (features, functions, price, benefits, etc.)
that make up an individual product or service
• It is applicable in various instances that focus on discovering
what type of product consumers are likely to buy and what
they value the most (and least) about a product.
• Conjoint analysis attempts to determine the relative
importance consumers attach to salient attributes and the
utilities they attach to the level of attributes.
 Introduction 2

It is a multivariate technique developed They are asked to evaluate these

specifically to understand how stimuli that consist of combinations of
respondents develop preferences for attribute levels in terms of their
any type of object. desirability

The respondents are presented with The preference with the highest utility
stimuli that consists of attribute levels is considered for final selection

Based on the evaluations utility of each In this model, we think that each possible

level of attribute is determined with level of an attribute has a "part worth to a

help of Conjoint analysis level of an attribute, and the sum of the

part worthies of its attributes is the total
worth" to a consumer of a product
2. Why use Conjoint
Analysis?

01 Helps businesses optimize product design.

Conjoint Provides important information for marketing

02
Analysis
strategies.

03 Predict customer behavior in a competitive

environment.
II. Basic Principles of Conjoint
Analysis
[Link] components of Conjoint Analysis

Attributes Levels Utilities

This method determines which factors most influence purchase

decisions by testing combinations of attributes and levels, thereby
providing strategic results.
2. Conjoint Analysis
Process Flow
Step 1: Identify
Attributes & Levels

• Identify the key attributes of a product or service that customers

consider before making a purchase decision.
• Each attribute will have different Levels, representing specific options
within each attribute.
Stage 2: Survey Design

Build survey questions or scenarios based on different combinations of

attributes and levels. Customers will be asked to choose between
different combinations of attributes.
Stage 3: Collect Data

• Customer responses from survey choices will be collected.

• The data collected shows how customers trade-off between
attributes and levels
Stage 4: Analyze Data

• Use tools and software to calculate utility scores for each attribute level.
• Utility scores represent the degree of customer preference for each level
of an attribute. The higher the score, the more preferred the level is by
the customers.
=> Determine which attributes influence purchase decisions most and how
customers trade-off between attributes.

Stage 5: Interpret
Results
Make strategic decisions about pricing, new product development, or
marketing.
3. Formulas

Utility Score Formula Formula for Calculating Range

for Each Attribute

Total Range Formula Relative Importance Formula

III. Conjoint Analysis
Methods

Full-profile Conjoint Choice-based Conjoint Adaptive Conjoint

Analysis (CBC) Analysis
Successful(ACA)
activities

• Full-profile Conjoint Analysis • CBC focuses on choosing • ACA focuses on personalizing

focuses on ranking the entire between product options. the experience and tailoring
set of attributes. • Example: Mobile Phones questions based on individual
• Example: Customer Attributes: feedback.
Preference Research - Cars ⚬ Screen Size: 5 inches, 6 • Example: Laptops
Attributes: inches, 7 inches Attributes: Screen Size, RAM
⚬ Color: Red, Blue, Black ⚬ Battery Capacity: 3000mAh, Capacity, Price, Brand
⚬ Engine Type: Gasoline, 4000mAh, 5000mAh Survey Process:
Electric, Hybrid ⚬ Price: $500, $700, $900 ⚬ Starts with general
⚬ Price: $20,000, $30,000, ⚬ Brand: Apple, Samsung, questions, then tailors
$40,000 Xiaomi follow-up questions based
⚬ Brand: Toyota, Honda, • Question: Choose one product on previous answers.
Ford from various options, for ⚬ Example: If a respondent
Question: Rate product example: Phone with a 6-inch prioritizes RAM capacity,
combinations, for example: Red screen, priced at $700, brand later questions will focus
III. Conjoint Analysis
Methods

Strengths: Provides a comprehensive view of consumer

01 preferences among sets of attributes, helping to better
understand their priority structure.

Weaknesses: Requires a significant amount of time from

Full-profile
Conjoint 02 participants and can be tiring if there are too many
Analysis attributes to evaluate.

Exploring Conjoint Analysis Methods in Market Research:

03 Understand customer preferences for all product
attributes, determining the importance of each product
factor.
III. Conjoint Analysis
Methods

Strengths: Easy to implement, simulates the actual

01
purchasing decision-making process of consumers.

Choice- Weaknesses: Can be influenced by choosing one option

based
02 from a specific set of choices, but does not provide as
Conjoint
(CBC) detailed information as Full-profile.

Exploring Conjoint Analysis Methods in Market Research:

03 Simulate real purchase decisions, evaluate the
effectiveness of product strategies in attracting and
retaining customers.
III. Conjoint Analysis
Methods

Strengths: Collects detailed data from each individual,

01
provides personalized information and optimizes the
evaluation process.
Adaptive
Conjoint Weaknesses: Requires skills and in-depth
02
Analysis knowledge to set up an effective ACA system.
(ACA)

Exploring Conjoint Analysis Methods in Market Research:

03 Personalize evaluations, gather individual data, and optimize
marketing strategies and product development for specific
customer segments.
III. Conjoint Analysis
Methods

Full-profile Conjoint Choice-based Conjoint Adaptive Conjoint

Analysis (CBC) Analysis (ACA)

• Adjusts questions
based on each
• Requires customers to
• Requires customers to individual's previous
choose between
rank entire sets of feedback, creating a
product options
product attributes personalized
created from
based on personal experience.
important attributes.
preferences. • Optimizes questions
• Measures customer
• Used to determine based on previous
Differences customer preferences
preferences by making
feedback to better
decisions among the
and find the ideal understand specific
available options.
combination of product preferences and needs
• Suitable for measuring
factors. of individual customers.
preferences and
• Suitable for • Suitable for
gaining a better
understanding the personalizing the
understanding of
factors influencing customer experience
customer purchasing
purchasing decisions and capturing specific
decisions through
IV. Applications of
Conjoint Analysis

Conjoint analysis in pricing Conjoint analysis in research &

development
• Developers can define customer needs and bring the
• Use conjoint analysis to ask customers to compare
right product or service idea to life.
different product features to determine how they
• At the beginning of product development, a conjoint
value them
• When business owners fully understand what analysis will help reveal the concepts that aren’t valued
by customers, allowing businesses to eliminate them at
customers value, they can determine the price
the early stages.
they’re willing to pay for their products or services.

Conjoint analysis for branding, package

Conjoint analysis in sales & marketing Successful
design, and productactivities
claims

• Businesses discover customer preferences, allowing • Conjoint analysis effectively tests package design
them to create marketing campaigns that will target and branding by presenting products as buyers
their preferences and increase sales. would see them in real life, capturing interactions
• Could help determine whether there’s enough market between design, colors, and messaging.
for a new product or service.
IV. Applications of
Conjoint Analysis

Conjoint analysis for needs-

Conjoint analysis in healthcare
based market segmentation

• Conjoint analysis can group • Health economists use conjoint

respondents based on their analysis and other kinds of choice
preferences, maximizing differences experiments to understand the trade
between groups while minimizing offs patients and healthcare
them within groups. providers make in choosing medical
• These needs-based segments can be treatments, which often feature
cross-referenced with other survey decisions about the quality and
data to profile key segments and length of life.
design products that enhance market
competitiveness.
IV. Applications of
Conjoint Analysis

• Many of the innovations we rely on today in our

conjoint and choice studies started off in the
transportation literature, including the Nobel-
prize winning work of Dan McFadden, who
invented the statistical model on which modern
Conjoint
conjoint analysis and choice experiments rely.
Analysis in
• A major multi-highway intersection, illustrating
Transportatio
conjoint analysis in transportation economics
n Economics
• Conjoint analysis helps transportation
researchers understand how travelers and
urban commuters value and tradeoff various
aspects of their travel experience.
 Example
IV. Applications of
Conjoint Analysis • Herd of deer bucks, illustrating
conjoint analysis in environmental
economics. The state of North Carolina
Conjoint analysis in environmental
surveyed a massive 33,000 hunters to
economics
Like many traditional marketing Conjoint analysis can be an get their input on deer hunting season

projects, environmental impact extremely helpful tool in these changes to help raise the natural

studies often seek to quantify both situations to model both sides of population of bucks.

the demand and revenue of certain a give-and-take relationship • The direct feedback from constituents

projects with the costs and between investment and trading off realistic scenarios (you can't

potential impact of the affected environmental conservation. have the longest season with the most

area. tags at the cheapest price) helped

guide lawmakers in an extremely
practical way.
V. Advantages and
Disadvantages of Conjoint
Analysis
ADVANTAGE
Estimating psychological trade-offs Simulating real-life shopping
when evaluating multiple attributes behavior and possibly using
simultaneously physical objects:

Measuring consumers' psychological Asking consumers to make choices

trade-offs between attributes, such as based on situations similar to real
price and quality, to choose a preferred ADVANTAGES shopping.
product.

Assessing individual preferences Modeling interactions between

and uncovering hidden attributes if designed properly:
motivations
Understanding individual consumer When the study is well designed, it
preferences can simulate how product attributes
Discovering important motivations or Support for demand-based interact with each other, showing the
factors that influence purchase segmentation influence of each attribute when
decisions that respondents themselves combined.
may not be aware of. By recognizing differences in
preferences and tastes between
consumer groups.
V. Advantages and
Disadvantages of Conjoint
Analysis
ADVANTAGE

Difficult to use for product Respondents may have

positioning research difficulty evaluating new
categories
There is no procedure for converting Respondents are unable to articulate
perceptions about actual features to attitudes toward new categories, or
perceptions about a reduced set of may feel forced to think about
underlying features DISADVANTAGES issues they would otherwise not give
much thought to

Complex design and prone to Poor research may bias results

confusion if too many on emotional attributes
attributes are involved

Does not take into account the

quantity of products purchased
per respondent
Weighting respondents by their self-
reported purchase volume or extensions
such as volumetric conjoint analysis may
remedy this
VI. Tools and software
supporting Conjoint Analysis

R with Conjoint
Sawtooth Software IBM SPSS
support package General features
Provides experimental design
Is specialized for Conjoint IBM SPSS provides a
Many packages that support methods
Analysis and market special module for
Conjoint analysis, such as Attribute preference analysis
research. Conjoint Analysis.
Main conjoint, [Link], conjoint.
It has features such as CBC With SPSS, you can Data modeling and analysis
feature provide functions for data
(Choice-Based Conjoint), perform classic Conjoint Reporting and visualization
s analysis from Conjoint Analysis,
MaxDiff, and other analysis analysis, create tables
from experimental design to
methods that help model and charts, and visualize
consumer choice modeling
consumer preferences. results easily. Benefits of Conjoint
Analysis support
User-friendly interface,
Easy to use for analysts software
who are not Time saving
many built-in modules Free, powerful and highly
Streng programming-savvy, High accuracy
and in-depth analysis flexible thanks to open
ths integrates well with
capabilities, support for source code. Easy to use
other statistical analysis
web-based analysis.
tools of IBM SPSS.
 VII.
EXAMPLE
[Link] the product is a mobile
phone. The competitors are
Apple, Sony, and NOKIA.

The organization needs to understand

how different customers value attributes:
brand, price, screen size, and screen
resolution

Armed with this information, they

can create their product range to
match consumer preferences.
When buying a It’s here
new car, what
factors will you brand model
consider?

price
Example 2

For example, you may face a trade-off between

choosing a car from your favorite brand but with a
high price, or a car that is not quite as desirable but
is more affordable
Example 2

This method allows for testing

and evaluating multiple
Such complex choices are attributes at once, far beyond
what conjoint analysis the limitations of single tests.
addresses by capturing the Therefore, conjoint analysis
relationship between product has become the gold standard
elements and consumer tool for businesses that want
preferences. to make decisions based on a
deep understanding of
customer trade-offs.

Let’s take a look at a simplified example of what

to expect when running a conjoint analysis
experiment and how it works behind the scenes.
 STEP 1
Break products into attributes
and levels
A car's components are broken down into
attributes like brand, engine, type, and
price, each with varying levels for
evaluation. Conjoint analysis software
then creates product combinations
(profiles) using these levels, ensuring a
balanced and independent design.

Each profile includes multiple features: brand and

engine, with systematically varied levels. These
profiles are presented in a series of 8-20 choice
tasks
 Survey respondents choose their preferred
STEP 2 concept in each choice task

We have a survey

Rather than ask respondents what

they subjectively prefer in a
product, or which attributes and
levels are most important (as when
using traditional rating scales and
standard survey questions),
conjoint analysis employs the more
realistic context of asking
respondents to choose products
from available options.
Most preferred option within sets of product
profiles
 STEP 3
The survey analyst builds a model
that quantifies market preferences

The conjoint software includes a

statistical model that considers the
available product options and
importantly which alternatives the
respondents chose. It statistically
deduces which product features are
most desired and which attributes
have the most impact on customer
choice..

(The charts above are for illustration purposes only and are not based
on real data)
 Did You Know?
Why is conjoint analysis important?

2. It consists of creating, distributing, and

1. The best survey method for analyzing surveys among customers to
determining customer values. model their purchasing decision based on
response analysis.

3. Gives you the ability to peek into your

target audience’s minds and see what
4.
they value most in goods or services and
acts
Conclusion

Conjoint analysis
Is an effective market research technique that helps businesses better understand their customer’s
preferences and make educated decisions about product creation, pricing, and marketing strategies.
Conjoint analysis is the main tool used to make informed decisions regarding:

• New product pricing

• Buyer decisions
• Selection of the best
• Customer preferences service or product
feature
• Market sales
• Market campaign
validation
THANK
YOU