multivariate data analysis(1)
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Multivariate Data Analysis
Conjoint Analysis
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Conjoint analysis is a statistical techniqueused in market research to determine howpeople value different features that make upan individual product or service.
What Is Conjoint Analysis?
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Important Terminology
Factor
Level
ProfileUtility
Part-Worth
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Conjoint analysis take these attributesand level description of product/servicesby asking people to make a number ofchoices between different product
EXAMPLE:- Would you choose Phone A orPhone B
Understanding the ConjointAnalysis
Phone A Phone B
Weight 200g 120g
Battery life 21hours 10 hours
price Rs 5000
Rs 8000
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Researcher can work out numerically (fromthe responses)have valuable each of the
level is relative others around it- this valueis known as the utility of the level
We can also compare across attributes to
see which attribute make have thegreatest impact in making a choice.
Utilies value for each level of weightRelative importance of attribute
0
2
4
6
8
10
12
0
2
4
6
8
10
12
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Usages of Conjoint Analysis
Individual Consumer
Segment Level
Across Segment
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Designing a Conjoint Analysis
Stage 1
Formulation of the Problem
Stage 2Construct the stimuli
Stage 3
Decide on the form of input
Stage 4
Select the conjoint procedure
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A Practical Example ofConjoint Analysis
Q: Would you prefer an airline travel with Aor B?
A: regular seats, that costs $400 and
takes 5 hours.B: costs $700 has extra-wide seats
and takes 3hours.
Extending this, we see that if seat comfort,price and duration are the only relevantattributes, there are potentially eight travelchoices.
Choice
SeatComfort
Price
Duration
Choice
SeatComfort
Price
Duration
1 Extra widea-Wide
$700700
5hrHours
5 Regularlar
$70000
5hr5Hours
2Extra-ExtrawideWide
$7$70000
3hrHours
6 RRegularegular
$700$700
33hrHours
3 ExtrExtra widea-Wide
$$40000
5 5hrHours
7 ReRegulargular
$400$400
5hrHours
4 EExtra widextra-Wide
$4$$400000
33hrHours
8 RegRegularular
$4$40000
3H3hrours
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Given the above alternatives:
Product 4 is very likely the most preferred choice.
Product 5 is probably the least preferred product.
The preference for the other choices is determined bywhat is important to that individual.
Conjoint analysis can be used to determine:
Relative importance of each attribute, attribute level,and combinations of attributes.
If the most preferable product is not feasible for somereason, identify the next most preferred alternative.
Using other information, such as backgrounddemographics be able to identify market segments for
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Utility Value
A traveler may like the comfort and arrivaltime of a particular travel, but rejectpurchase due to the cost.
In this case, price has a high utility value.
Utility can be defined as a number whichrepresents the value that consumers place
on an attribute.
Utility represents the relative "worth" of theattribute.
Price
Utility
$4000
655
$$700700
5
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Types of Conjoint Analysis
Adaptive Conjoint Analysis (ACA)
Choice Based Conjoint (CBC)Full profile Conjoint Analysis
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Advantage of ConjointAnalysis
Estimates psychological tradeoffsthat consumers make when
evaluating several attributestogether
Measures preferences at the
individual levelUncovers real or hidden drivers
which may not be apparent to the
respondent themselves
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Realistic choice or shopping task
Able to use physical objects
If appropriately designed, theability to model interactionsbetween attributes can be used todevelop needs based segmentation
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Limitation of ConjointAnalysis
Designing conjoint studies can becomplex
With too many options, respondentsresort to simplification strategies
Respondents are unable to articulateattitudes toward new categories, ormay feel forced to think about issuesthey would otherwise not give muchthought to
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Poorly designed studies may over-value emotional/preferencevariables and undervalue concrete
variablesDoes not take into account the
number items per purchase so it
can give a poor reading of marketshare
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