The following is a guest article by Jonathan Wickham.
Conjoint analysis is the preferred technique for investigating the preferences for product features. It is perfect for determining what factors and conditions help the consumer make the actual purchasing decision. The idea is to have conclusive data on what variables the consumers values most. Once you have this information, you will be able to bundle your product with the most popular features. The overall goal is to have a more attractive package that will be purchased more often.
Conjoint analysis was first used in mathematical psychology and was developed by Paul Green from Penn U. There were a variety of other professors that helped pioneer the creation and development of modern conjoint analysis.
Conjoint analysis is used in a variety of different industries in today’s business layout. Most of these are made up of businesses that have several, flexible features that make up a single product. An example of this could be a flat screen television. There are several different TV types like LED, LCD, or plasma. Other attributes of a flat screen television are the screen size, pricing, brand, color, and warrantee. Conjoint measures what different features need to be combined at what price point to maximize profit and sell the highest number of units.
There are some major disadvantages to conjoint analysis. The first and most prominent of these is conjoint studies can be complex and difficult to produce. Many times the company providing the analysis will produce so much market research that it is extremely difficult to have any conclusive data. Another problem is that poorly designed studies may over emphasize the importance of a single feature causing bad decision-making. It is critical to do your homework and find the right company to perform your conjoint analysis.
The advantages of a proper analysis outweigh the disadvantages 10 fold. The biggest of these is having a real idea of the psychological tradeoffs consumers are making when evaluating several attributes together. With this data, you should be able to uncover real or hidden drivers that help consumers make their decisions about purchasing a product. If the analysis is constructed in the proper manner, conjoint analysis can be an important tool for helping to take a company to a more profitable position. Consumer research is always going to have a place in business. Conjoint analysis is going to be the next tool to provide accurate, consumer data.
Jonathan Wickham is an online marketing guru from Orem, Utah, currently working for Qualtrics, a provider of survey software. You can learn more about conjoint analysis at the Qualtrics website.
Photo by Robert Scoble
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