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Conjoint Analysis

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Neeraj Kaushik
Neeraj Kaushik

Conjoint analysis is a multivariate technique that captures the exact utility levels that customers assign to different product attributes. It allows direct comparison of the utility of different attribute levels, like price points or delivery times. For example, a paint company could use conjoint analysis to understand how customers value and trade off attributes like paint color, price, and longevity. The technique involves coding attributes and collecting customer ratings of different attribute combinations. The ratings are then analyzed to determine the utility values and relative importance of each attribute level. This allows predicting how changes to attributes would impact customer preference and choice.

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Conjoint Analysis Dr Neeraj Kaushik TIT&S Bhiwani
Conjoint Analysis Conjoint Analysis is a multivariate that captures the exact levels of utility that an individual customer puts on various attributes of the product offering. It enables a direct comparison between the utility of Rs 400 versus Rs 500, a deliver period of 1 week or 2 weeks.
Conjoint Analysis Usage New Product Development To predict market share and the response of customers to changes in competitive strategy through changes in marketing elements.
Example: XYZ Paint Company Life- No. of years the paint lasts Price-Price of one litre of paint Colour- Colour of paint Life- 3 yrs, 4 yrs, 5 yrs Price- Rs 50/ltr, Rs 60/ltr, Rs 70/ltrColour- Green, Blue, Cream
Raking from the Respondent 4 Cream 60 3 4. 3 Green 70 3 3. 2 Blue 70 3 2. 1 Cream 70 3 1. Rating Colour Price Life Sr No.
Effects Coding for various attributes Basic Postulate All Utilities for a given attribute should sum 0 -1 -1 5 1 0 4 0 1 3 Var2 Var1 Life
Effects Coding for various attributes -1 -1 70 1 0 60 0 1 50 Var4 Var3 Price -1 -1 Cream 1 0 Blue 0 1 Green Var6 Var5 Colour
Input Data in Effects code Rating Colour Price Life 4 -1 -1 1 0 0 1 3 0 1 -1 -1 0 1 2 1 0 -1 -1 0 1 1 -1 -1 -1 -1 0 1 Var7 Var6 Var5 Var4 Var3 Var2 var1
Input Data in Effects code Data in Excel sheet Data file
Output
Output
Output
Utility Table -2.23 -0.88 3.11 -5.33 -0.11 5.44 7.00 0.11 -7.11 Utility 3.11- (-2.23) =5.34 5.44- (-5.33) =10.77 0.11- (-7.11) =7.22 Range Cream Blue Green Colour Rs 70 / litre Rs 60 / litre Rs 50 / litre Price 5 years 4 years 3 years Life Levels Attributes
Interpretation Two Indicators Range of Utility is highest for Price Highest Individual value of utility is 7.00 for 7 years of Life Difference in Utility can also be checked e.g. Changing life from 4 years to 5 years increases Utility by 6.89
Interpretation Total Utility of any combination can be calculated now E.g. Combined utility of 4 years life, Rs 70/Litre and Cream colour is 0.11-5.33-2.23=-7.45 Best Combination 5 years life, Rs 50/Litre and Green colour Get Utilities from all customers and average them to get Average Utility Value .
Presentation by: Dr. Neeraj Kaushik Asstt. Professor (Management Studies) The Technological Institute of Textile & Sciences Birla Colony Bhiwani-127021 Haryana [email_address] Website: http://titsbhiwani.org

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Conjoint Analysis

  • 1. Conjoint Analysis Dr Neeraj Kaushik TIT&S Bhiwani
  • 2. Conjoint Analysis Conjoint Analysis is a multivariate that captures the exact levels of utility that an individual customer puts on various attributes of the product offering. It enables a direct comparison between the utility of Rs 400 versus Rs 500, a deliver period of 1 week or 2 weeks.
  • 3. Conjoint Analysis Usage New Product Development To predict market share and the response of customers to changes in competitive strategy through changes in marketing elements.
  • 4. Example: XYZ Paint Company Life- No. of years the paint lasts Price-Price of one litre of paint Colour- Colour of paint Life- 3 yrs, 4 yrs, 5 yrs Price- Rs 50/ltr, Rs 60/ltr, Rs 70/ltrColour- Green, Blue, Cream
  • 5. Raking from the Respondent 4 Cream 60 3 4. 3 Green 70 3 3. 2 Blue 70 3 2. 1 Cream 70 3 1. Rating Colour Price Life Sr No.
  • 6. Effects Coding for various attributes Basic Postulate All Utilities for a given attribute should sum 0 -1 -1 5 1 0 4 0 1 3 Var2 Var1 Life
  • 7. Effects Coding for various attributes -1 -1 70 1 0 60 0 1 50 Var4 Var3 Price -1 -1 Cream 1 0 Blue 0 1 Green Var6 Var5 Colour
  • 8. Input Data in Effects code Rating Colour Price Life 4 -1 -1 1 0 0 1 3 0 1 -1 -1 0 1 2 1 0 -1 -1 0 1 1 -1 -1 -1 -1 0 1 Var7 Var6 Var5 Var4 Var3 Var2 var1
  • 9. Input Data in Effects code Data in Excel sheet Data file
  • 13. Utility Table -2.23 -0.88 3.11 -5.33 -0.11 5.44 7.00 0.11 -7.11 Utility 3.11- (-2.23) =5.34 5.44- (-5.33) =10.77 0.11- (-7.11) =7.22 Range Cream Blue Green Colour Rs 70 / litre Rs 60 / litre Rs 50 / litre Price 5 years 4 years 3 years Life Levels Attributes
  • 14. Interpretation Two Indicators Range of Utility is highest for Price Highest Individual value of utility is 7.00 for 7 years of Life Difference in Utility can also be checked e.g. Changing life from 4 years to 5 years increases Utility by 6.89
  • 15. Interpretation Total Utility of any combination can be calculated now E.g. Combined utility of 4 years life, Rs 70/Litre and Cream colour is 0.11-5.33-2.23=-7.45 Best Combination 5 years life, Rs 50/Litre and Green colour Get Utilities from all customers and average them to get Average Utility Value .
  • 16. Presentation by: Dr. Neeraj Kaushik Asstt. Professor (Management Studies) The Technological Institute of Textile & Sciences Birla Colony Bhiwani-127021 Haryana [email_address] Website: http://titsbhiwani.org