A Guide to Conjoint analysis For Businesses. As a business, the importance of conjoint analysis cannot be overstated. This method is an advanced market research analysis that helps businesses understand how customers make choices before making a purchase.
Conjoint Analysis Overview
In the past fifty years, conjoint analysis has experienced an evolution and has become a widespread method used by in market research to predict customers decisions about products through a survey.
The idea behind it is that for consumers to evaluate various product features, attributes and choose what’s important to them before making a purchase decision.
Every day, consumers are facing choices that require trade-offs and they do this without realizing it. Even decisions like choosing a bar of soap to booking a flight for a trip has several things that could lead to making a choice.
Let’s take an example of a customer trying to buy a house. This may be one of the hardest purchase decisions the customer is making as they have to consider several preferences. From price to location to interest rate down to how good the local schools are – each factor play a role in making the ultimate decision.
For purchases that are less complex, they still feature a related process of selecting a product or service that meets the consumer’s needs. In truth, most people aren’t even aware they make decisions like this on a regular basis.
Subconsciously, a consumer may be more feature focused while the other will be more price sensitive. As a business, you have to understand the elements your consumers consider important as this is the major purpose of conjoint analysis.
When it comes to getting consumer preferences in the course of purchasing a commodity or service, your best chance is conjoint analysis. Data extracted from the analysis is translated to quantitative measurement using statistical analysis. This assesses services or products in ways that isn’t possible for other methods.
Rating surveys do not have the capacity to place a value on the various qualities that constitutes a product. On the other hand, conjoint analysis has the ability to sift through the choices of respondents to get the rationale behind making such choices.
By analysing such data, you’ll get the chance to understand the mind of your target market. You’ll also see the things they value in services or good and you can use it as a market simulator.
Most businesses often avoid conjoint analysis due to its perceived complex methodology and design. In truth, this can be done for you with ease by The Consultants bv. Here are some basic conjoint analysis terms you should know and when to use them.
Important Conjoint Analysis Terms
- Attributes: The features of the product are assessed by this analysis. Some examples of attributes for phones a consumer will note are size, brand, battery life and color.
- Profile or Concept: This is the hypothetical offering or product. This are attributes with various levels that are shown at every task count. Usually, there are at least two to pick from.
- Demand curve and price elasticity: Price elasticity talks about the cumulative demand for a product and the demand curve’s shape. It can be calculated by plotting the demand at various price levels (frequency count/total response).
For businesses that want to move to the next level, it is important to carry out conjoint analysis. The data and value this analysis provides will enhance your business and we at The Consultants bv are here to help you through the process.