Group D -

Managerial Overview of Conjoint Analysis- Sanchit (group D)

A great deal of market research commissioned today is descriptive in nature rather than predictive. Descriptive information is useful to characterize demographics,usage patterns, and attitudes of individuals. Beyond descriptive information, managers need survey research tools that can predict what consumers will buy when faced with the variety of brands available and myriad product characteristics. It is precisely due to this focus that conjoint or trade-off analysis has become so popular over the last three decades. Humans employ a variety of heuristics when evaluating product alternatives and choosing in the marketplace. Many products are made up of a dizzying array of features (e.g., computers, cell phone calling programs, insurance policies, and manufacturing equipment), whereas some are more straightforward (e.g., yogurt, beverages, and light bulbs) and are mainly differentiated by brand, packaging, and price. How does the manager decide what product characteristics, packaging, and branding to use or what price to charge to maximize profits? And how does the consumer evaluate the offering vis-a-vis other alternatives in the marketplace? `
To decide what product to sell, managers may use their own intuition or the recommendations of design engineers, or they may look to competitors for indications of what already works. These strategies are myopic and reactive. In consumer-oriented organizations, potential products are often evaluated through
concept (market) tests. Buyers are shown a product concept and asked questions regarding their purchase interest, or new products are actually placed in test markets. These tests can be quite expensive and time consuming, and generally investigate just one or a few variations of a product concept. In some surveys, research respondents are asked to rate brands and products or to check which brands and product features they prefer. None of these approaches by itself has been consistently successful and cost-efficient. Conjoint analysis uses the best elements of these techniques in a cost-effective survey research approach.