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Conjoint Analysis

Conjoint analysis is a statistical technique used in market research to determine how people value different features that make up an individual Product or Service. The objective of conjoint analysis is to determine what combination of a limited number of attributes is most influential on respondent choice or decision making. A controlled set of potential products or services is shown to respondents and by analyzing how they make preferences between these products, the implicit valuation of the individual elements making up the product or service can be determined. These implicit valuations (utilities or part-worths) can be used to create market models that estimate market share, revenue and even profitability of new designs.

Advantages
  • Estimates psychological tradeoffs that consumers make when evaluating several attributes together
  • Measures preferences at the individual level
  • Uncovers real or hidden drivers which may not be apparent to the respondent themselves
  • Realistic choice or shopping task
  • Able to use physical objects
  • If appropriately designed, the ability to model interactions between attributes can be used to develop needs based segmentation
Disadvantages
  • Designing conjoint studies can be complex
  • With too many options, respondents resort to simplification strategies
  • Difficult to use for product positioning research because there is no procedure for converting perceptions about actual features to perceptions about a reduced set of underlying features
  • Respondents are unable to articulate attitudes toward new categories
  • Poorly designed studies may over-value emotional/preference variables and undervalue concrete variables
  • Does not take into account the number items per purchase so it can give a poor reading of market share
[Thank you, Wikipedia]