Do you like advertisements?
Ever wonder why certain advertisements are so relatable, whereas others are average?
The difference between suitable ads and great ads is market research.
A great ad is relatable because the researcher understands what the target audience wants — their thought processes, what might impact their decisions, and how willing they are to compromise to get the desired product.
Such research is possible due to conjoint analysis.
If you’re in the dark about conjoint analysis, you’re in the correct place.
We will help you with the basics of conjoint analysis, with the most prevalent terminologies and their advantages.
So, let’s get started!
Conjoint Analysis: Key Terminology
Conjoint analysis is an advanced research tactic with many unique terms. To help you simplify it, let’s take a look at its commonly used terminology:
Attributes (Features)
These are the product characteristics the customers will evaluate before buying.
An example of attributes of a laptop would be its brand, color, weight, memory, RAM size, and battery life.
Levels
These indicate the possible value of each attribute.
For example, levels of the attribute would be Dell, Apple, Lenovo, and Asus.
Task
The task is the choice that a respondent has to make between two or more products.
For example, a task might ask respondents to choose between four different laptops, each with random brands, prices, screen sizes, and storage capacity levels.
Concept or profile
A concept or profile is a combination of different levels of attributes of a hypothetical product or service.
For example, a concept might be “Brand A, medium price, large screen size, high storage capacity, and advanced features.” Another concept might be “Brand B, high price, small screen size, low storage capacity, and basic features.”
Relative importance
It calculates how much each attribute contributes to decision-making.
An example of relative importance when buying a laptop is as follows: Brand 25%, Price 35%, Size 10%, and Battery Life 30%.
Utility values or part-worths
It measures how customers value a product’s attributes. A higher utility value means that the quality is significant to the customer.
An example of utility values for laptop brands is as follows: Dell -0.16, Apple 0.17, Lenovo 0.10, and Asus -0.11.
Market share simulations
This help predicts consumers’ choices for hypothetical new products and concepts. It estimates the potential market share of each product concept. Additionally, it pinpoints the qualities and degrees that influence consumer preferences and market outcomes most.
For example, suppose a conjoint analysis study involves three attributes: brand, price, and screen size. Based on respondents’ preferences, it is estimated that a laptop with “Brand A,” “Medium Price,” and “Large Screen Size” would have a market share of 40%. In contrast, a laptop with “Brand B,” “High Price,” and “Small Screen Size” would have a market share of 15%.
These estimates can help businesses make data-driven decisions about product design and pricing. It also helps inform marketing strategies to target specific customer segments.
Brand premium
This is the added value or preference consumers give a product simply because it is associated with a particular brand. In such cases, consumers are willing to pay extra only because of the brand association.
Price elasticity
It refers to how your consumers will react to price changes. Simply put, it will tell you whether or not your customers will still buy your product if you increase its price.
Now that you’re familiar with conjoint analysis’s key terminologies let’s check out the definition!
Also Read: A Guide to Measurement & Data Scales.What is Conjoint Analysis?
Conjoint analysis is an advanced form of market research that attempts to determine how people make complex decisions. It uses a common technique that combines real-life scenarios and statistical methods to evaluate buying choices and consumer preferences.
We unwillingly make choices that require us to accept some form of compromise, even in our everyday lives. It is similar easiness of choosing your coffee at the cafe or as complex as deciding which car to buy.
Deciding to buy a TV is another example of conjoint analysis. You will consider its size, model, and screen resolution, among other factors.
How will customers react to this new product or service if it is released?
This is what conjoint analysis strives to answer, and it does so using quantitative values, meaning you can also measure it. With the help of a survey, we can focus on the buyer’s journey.
For example, consider our previous example of deciding to buy a TV. A consumer will pick the option that best reflects their lifestyle after considering all the required specs.
Significance of Conjoint Analysis?
The conjoint analysis gets its name by providing consumers with multiple options and then analyzing them. The results help companies determine how to launch a new product/service.
Furthermore, conjoint analysis is divided into choice-based conjoint analysis (CBC) and adaptive conjoint analysis (ACA).
CBC measures how consumers choose products with different attributes and levels. It is based on the idea that consumers make trade-offs among various product features and pick the product that best fulfills their needs.
Whereas ACA also estimates customers’ preferences accurately. It also identifies essential attributes and levels driving consumer behavior.
ACA tailors the attributes and levels presented to respondents based on their previous choices, thus making it more efficient and accurate.
Now that you know how conjoint analysis can be classified, let’s examine its importance.
Also, Read A Simple Guide to Quantitative Research for Businesses.Advantages of Conjoint Analysis
The conjoint analysis offers the following benefits:
- It shares consumer preferences with the researchers on a personal level
- It provides insights into customers’ hidden, emotional, or psychological drivers
- By considering numerous attributes, it estimates how far consumers are willing to compromise
- By studying the consumer and characteristics deeply, it can provide researchers with needs-centric data
Also read: User Research Democratization: Why it Matters?Conclusion
In the right hands, conjoint analysis can be a powerful tool. It helps you better understand your customers’ desires and take specific action about product creation, design, pricing, and marketing strategies.
Yes, it does require convincing survey design and analysis, but the extra effort is worth it.
Going the extra mile gives you critical insights into your audiences’ minds and decision-making processes. This alone is invaluable if you’re considering launching or promoting a new offering.
If you’re looking for the perfect survey creation tool that helps you conduct conjoint analysis, SurveyPoint is your best bet!
It offers you an extensive set of features and tools that will help your business conduct analysis in the best possible way.
