What is Conjoint Analysis?
Conjoint analysis, aka Trade-off analysis, is a popular research method for predicting how people make complex choices. Conjoint asks people to make tradeoffs just like they do in their daily lives. You can then figure out what elements are driving peoples’ decisions by observing their choices.
Every day as customers make choices between products and services they are faced with trade-offs. Is convenience more important than low price and speed of service? Or is high quality more important than atmosphere and high price? Often these choices are not conscious rational decisions – nevertheless, these decisions are made because people do make choices between alternatives.
Conjoint analysis is based on the fact that the relative values of attributes can be accurately measured when considered jointly.
Conjoint Analysis Example
Let’s say you’re planning to take your significant other out to a nice dinner. As you’re researching which restaurant to attend you begin to weigh a series of elements.
- Distance to the restaurant
- Relative cost of the restaurant
As you’re researching which restaurant to attend, you’re most likely presented with these elements all at once. You make your decision by (subconsciously) weighing the different elements and choosing the restaurant that best meets your needs. For example, restaurant #1 may be close to you, cheap in cost, but has a sub-par atmosphere. Restaurant #2 may be further away, more expensive, but has an excellent atmosphere. If you chose restaurant #2, the atmosphere element obviously carried more weight in your eyes than the other two elements.
How Does Conjoint Analysis Work?
Depending on the number of attributes being tested, a specific number of product profiles or subsets are determined.
For example, a messaging study may be described in terms of attributes such as product, service, and competitors. Each of these attributes is broken down into levels – for instance levels of the attribute for “competitors” would include a list of competitors (Company A, Company B, etc.). This would allow you to see how individual elements respond when attached to your competitors’ name.
How Conjoint Analysis Can Impact Your Business
In business, it’s important to understand how markets value different elements of your products and services. Identifying these elements of higher value will enable you to optimize product development and adjust your pricing structure around the customers’ willingness to pay for specific elements.
Conjoint Analysis Tools
There are several different conjoint tools and approaches. Optimization Group is well versed in all of the major software packages and is able to recommend the specific conjoint approach that best meets the unique requirements of your marketing issue.
In addition to the commercially available software packages, we have developed proprietary trade-off analysis approaches to fit unique marketing problems often encountered in the development of optimal communications strategies.