What is Conjoint Analysis and How Can It Increase Sales?

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 analysisConjoint 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

Related Marketing Books

7 Marketing Lessons From Happiness Research

Happiness research, also known as positive psychology, has grown rapidly as an area of academic study in recent decades, resulting in some fascinating findings about what can influence our level of happiness. These findings suggest that certain decisions like whether to get married, moving to the suburbs, or choosing a high paying job can have a significant long-term impact on our happiness. Understanding the key findings in happiness research can help marketers improve the lives of their customers as well as our own.

The Income Plateau

happinessData across studies suggest that increased income has a stronger effect on happiness level at the lower ranges of income, but this effect appears to plateau at a certain level. When people are living in poverty, increased income can provide shelter, food, and transportation, which can reduce worry about life’s basic necessities. However, once individuals reach the middle class, studies have shown that additional income has little effect on the level of happiness. According to the Happiness Hypothesis, the small correlation from increased income may be explained by reverse correlation because happier people tend to get promoted. Despite the ability of richer individuals to buy more products designed to improve the life of the purchaser, we tend to quickly return to our baseline level of happiness, in an effect known as the hedonic treadmill.

The Adaptation Principle

A study of major lottery winners and paralyzed accident victims found that on average, both groups returned close to their baseline level of happiness within one year (The Happiness Hypothesis). People are very good at adapting to changes, which also means that material goods often provide only a temporary emotional boost that quickly fades.

The Progress Principle

We receive positive feelings when we make progress towards our goal, and often overestimate how happy achieving a goal will make us. Tony Hseih, the CEO of Zappos, recounts when he received the call where he learned that his company LinkExchange was sold to Microsoft for about $265 million. “The excitement of LinkExchange had disappeared long ago. Now we just had the drudgery of sticking around uninspired and unmotivated for another twelve months. ‘I guess we should probably walk back to the office then’ I said. ‘Okay’ and so we did in silence”. Often we receive more pleasure from making progress toward a goal than we do from achieving a goal. Products like Farmville can be highly addictive because they provide constant signals that show continuous progress. A training course can be highly engaging if it provides feedback about how the student is growing during the course.

The Paradox of Choice

In the book The Paradox of Choice, Barry Schwartz discusses how more choice can cause anxiety for shoppers. More options can lead consumers to be less confident with their purchase and more likely to feel regret. Too many choices can also cause people to avoid making a choice. Offering a small number of choices can make it easier for customers to make a decision and can lead to less buyer remorse.

The Importance of Control

While too much choice can cause problems, no choice at all can also have a negative impact on happiness. A lack of control can cause negative feelings which can help explain why people tend to be stressed after a traffic-filled commute. Residents of a nursing home who were given small choices like when to have movie night and which plants they wanted, experienced better health and higher levels of happiness. Giving customers a sense of control or the ability to choose can often lead to higher satisfaction.

Experiences Versus Material Goods

The book Happiness Hypotheis describes a study where participants were asked about purchases of experiences (such as a ski trip or a great meal) and material objects. The subjects felt happier when thinking of the experiences and thought this money was better spent. People are often driven to gain prestige through conspicuous consumption, in what the author of Happiness Hypothesis calls a happiness trap. Experiences can provide more happiness because they have social value while luxury goods are often purchased to impress people.

The Importance of Relationships

Happiness research has shown that the quality and quantity of relationships is one of the most influential factors in increasing happiness. The impact of relationships helps explain why church-goers are happier on average than non-church goers since they are often involved in the church community. Products or services that help people improve relationships can have great value to consumers.

Do you agree with these findings or have any to add? Please comment below.

Photo credit: jaja_1985

Why Free Stuff is the Key to Customer Satisfaction

Mike Essex is the author of Free Stuff Everyday, a guide on how customers can get free stuff, and a search specialist at Digital Marketing Agency, Impact Media. In the following guest post, he talks about how brands can improve their customer satisfaction simply by giving their products away.

Whether you are working on a new product, or have been in the market for years, it’s possible get a real insight in to the mindset of customers simply by giving away free stuff. They can help build new customer relationships via brand advocates, or repair broken relationships. This article examines how you can integrate freebies throughout the product life cycle and the improved customer satisfaction that will occur as a result.

Initial Research

To ensure your customers are happy with your product when it is released it’s important to start at the very beginning of the new product process. Gather together a collection of your target audience and invite them in for focus groups on your new product. Involve everyone from bloggers in your niche, to past customers of your other products. Make sure everyone signs an NDA, and you’ll ensure all ideas discussed are protected. In return offer them an exclusive preview, and the final product for free.

By doing this you’ll understand product flaws early on, and will have an idea of whether the final product will satisfy customers. Better yet, when you give the product away at the end of the process you’ll have a group of customers who can help spread the word on your product. If you’ve been able to integrate their ideas in to the finished product, then you will have a good set of satisfied customers and brand advocates.

Product Testing

We’re not ready to launch just yet and as with the initial research it’s just as important to test the finished product on another sample group. The same process applies, promise an exclusive look, and let them keep the product when they’re finished.

In addition ask everyone to provide you with a quote on their experience with the product. Gather these quotes in multiple formats (audio, video, text) and when you come to market the product you have a set of satisfied customer opinions that can be used to encourage people to make a purchase. For new customers, seeing other satisfied customers leads to improved sales, and psychologically improves the likelihood the purchaser will be satisfied as they have seen other people who enjoyed the product.

Product Launch

When you are ready to launch in addition to using the previous quotes, you should then provide free
products to key customers in your niche. This includes:

  • People using similar products on video sites
  • Bloggers
  • Industry Experts
  • Your most vocal social media fans
  • Writers in your niche
  • Journalists

This is very much a numbers game. If your product is expensive then you won’t be able to hit every possible source, so choose the customers who are most likely to be satisfied by your product. If your product is very expensive then offer a 30 day free trial, or a product loan as a freebie alternate. Should your product be digital, or have low creation costs, then you should still hold back slightly – as you don’t want you entire customer base to be given a free product.

When products have been sent out, ask for reviews or coverage in return. The more satisfied these customers are the better coverage you will get. Likewise the better a freebie you can provide will help this satisfaction grow.

Encouraging Loyalty

Follow the product launch by searching across social media to find people who have said positive things about your product. Visit review websites, search Twitter and Google for your product name to seek out these positive customer experiences. Each time you find one, add this customer to a spreadsheet and then try to find their email contact details and other contact methods they have listed online.

You can then encourage further loyalty by giving them something for free. As they already own the product this could be – another sample for a friend, merchandise you have, random things from the office or a visit to your office/factory. Even spending time to follow these customers on social media and engage with them can help grow the relationship. You can even use these customers in helping plan your next product, repeating the process again.

Negative Customer Feedback

If a customer simply isn’t satisfied there’s no reason to ignore them, and free stuff can be used as a means of getting them back on your side. If a customer had a bad experience with your product, then offer them a replacement or similar goods. A refund is a great way to apologise, and can lead to their original bad comments being removed, as their satisfaction and trust in your brand is restored.


By giving something away in return you can get vital customer feedback throughout your entire product process. Customers know what they want, and the more opinions you can gather on your product the better. A stronger overall product will lead to improved satisfaction. From positive customers, to negative experiences there are very few scenarios that can’t be improved with a freebie.

You can learn more about Mike Essex on his website or on Twitter @Impact_Mike. He is more than happy to receive emails from businesses or customers who want to learn more about free stuff.

Do Small Businesses Need Marketing Research?

Do small businesses need marketing research? According to the new book More Guerrilla Marketing Research they should consider the benefits. Some of the benefits that the book describes are:

Finding out what will get your customers to buy more often

Knowing what will get customers to buy from you more frequently can help you increase revenues by taking actions to encourage repeat purchases from existing customers.

50 % of the profits of most companies come from products that didn’t exist five years ago
Through marketing research you can find out what your customers really want or need and then create a new offering that produces new revenues.

Satisfied customers and loyal customers are usually the most profitable customers
Almost any company cares about having happy customers. Finding out whether your customers are happy and what they are unhappy about can be valuable for increasing customer retention.

One of the best uses of marketing research is to kill a bad idea
Sometimes research can show that an product or service idea that you thought was great, isn’t so great when you test it.  Finding out that a new offering is not well received by customers early on can save a lot of time and money.

While there’s a lot of practical information and it goes into depth into how to conduct market research, it is written in a textbook style that can be tedious. I wouldn’t recommend this book unless you really want to learn about marketing research and how to do it yourself. It even goes into focus groups, which I’m not sure would be necessary for small businesses.

Twitter is the Ultimate Marketing Research Tool

marketing stuffBy now many are realizing the tremendous potential of Twitter as a marketing vehicle to communicate to a community that has given you their permission and attention. According to TechCrunch, Jason Calicanis just offered $250,000, just to be listed on the suggested Twitterers for 1 year, and thinks a spot on this prestigious list will be as valuable as a superbowl spot within 5 years. Even Facebook wants to be like Twitter as demonstrated by their new profile page. Twitter has appeared to have made it mainstream with Twittering celebrities like britneyspears, the_real_shaq, aplusk (Ashton Kutcher), jimmyfallon, just to name a few. The network effect means that as Twitter continues to grow it will become more valuable to each user, and thus more valuable to marketers.

One of the major applications of Twitter is in market research. Imagine having a test group of millions, that can provide real time consumer feedback at a unprecedented level. Companies will be able to release a new product and almost instantly find out what people think. Additionally they can get take the pulse of customer sentiment and then make changes to increase customer satisfaction. Twitter could also empower customers to get their complaints heard as unhappy customers will have a way to tell thousands of followers about their bad experience. All it takes is a short text message that gets retweeted and a brand’s reputation can be tarnished overnight. This could mean a stronger focus on improving customer experience to prevent a fiasco ten times worse than Jeff Jarvis’ infamous Dell Hell blog post. Optimistically, companies will be able to better understand the customer by listening more closely and using the data mined from the Twitersphere to create improved products and services that will increase customer satisfaction.

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