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>>>Advanced Analytics>>Conjoint Analysis
Let's look at a simple example. Suppose you wanted to book a vacation and you had a
choice of spending $3,000 or $7,000 for a package. If this were the only
consideration then the choice is clear: the lower priced package is preferable.
What if the only consideration in purchasing a package was a one bedroom or
two-bedroom suite? If suite size was the only consideration then you would
probably prefer a two bedroom suite. Finally, suppose you can take either a
direct flight which takes three hours or a flight that stops once and takes
five hours. Most probably everyone would prefer the direct flight.
In a real purchase situation, however, consumers do not make choices based on a
single attribute like comfort. Consumers examine a range of features or
attributes and then make judgments or trade-offs to determine their final
purchase choice. Conjoint analysis examines these trade-offs to determine the combination
of attributes that will be most satisfying to the consumer. In other words, by
using conjoint analysis a company can determine the optimal features for their
product or service. In addition, conjoint analysis will identify the best
advertising message by identifying the features that are most important in
product choice.
In sum, the value of conjoint analysis is that it predicts what products or
services people will choose and assesses the weight people give to various
factors that underlie their decisions. As such, it is one of the most powerful,
versatile and strategically important research techniques available.
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