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Questions and Answers
What percentage of a product's manufacturing costs are typically incurred during the early stages of its design?
What is the primary purpose of conjoint analysis?
In a conjoint study, what are the specific values or options for each attribute called?
What is the result of analyzing data in conjoint analysis?
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What do respondent's rankings or ratings of hypothetical product profiles help to determine?
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What do part-worth functions help to identify in conjoint analysis?
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What is the primary benefit of Conjoint Analysis in product development?
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What is an important consideration in survey design for Conjoint Analysis?
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What is the primary advantage of Choice-Based Conjoint (CBC) Analysis?
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What is the primary disadvantage of Adaptive Conjoint Analysis (ACA)?
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What is the primary benefit of Max-Diff Conjoint Analysis?
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What should be the focus of interpretation in Conjoint Analysis?
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Study Notes
Product Design and Manufacturing Costs
- 80% of a product's manufacturing costs are incurred during the first 20% of its design, which varies depending on the product category.
Conjoint Analysis
- Conjoint analysis is a systematic approach for matching product design with customer needs and wants.
- It is especially useful in the early stages of the New Product Development process.
- Conjoint analysis helps identify which features are most important to customers and how much they are willing to pay.
Conjoint Study Process
- Design the conjoint study: select attributes relevant to the product or service category, select levels for each attribute, and develop product bundles to be evaluated.
- Obtain data from a sample of respondents: design a data-collection procedure, select a computation method for obtaining part-worth functions.
- Evaluate product design options: segment customers based on their part-worth functions, design market simulations, and select a choice rule.
Measuring Importance by Measuring Utility
- Preferences represent a higher-order construct than utility.
- Example: pizza vs. Thai food.
Conjoint Analysis Purpose and Method
- Purpose: understand customers' preferences and priorities when making decisions among different products/services.
- Method: present a set of hypothetical products/service profiles, each profile including different attributes and levels, and respondents rank or rate these profiles based on their preferences.
Attributes and Levels
- Attributes: characteristics of a product/service, such as brand, price, and color.
- Levels: specific values or options within each attribute.
Analysis and Output
- Analyze data to determine the importance of each attribute and its preferred level.
- Identify trade-offs people are willing to make when choosing between different options.
- Output: provide insights into what features or attributes are most influential in shaping consumer preferences.
Benefits of Conjoint Analysis
- Quantifies customer preferences: provides numerical scores reflecting the value customers place on different features.
- Predict market response: simulates different product configurations with their estimated utility scores to predict how customers might respond to various product offerings.
- Informs product development: helps prioritize features, optimize pricing strategies, and develop products that cater to the target market's preferences.
Important Considerations
- Survey design: can influence the results, and it's important to present a realistic set of product profiles and avoid too many choices.
- Sample size: a statistically significant sample size is important for reliable utility score estimates.
- Interpretation: utility scores are relative, and it's important to focus on the differences in scores to understand which features and levels are most valued.
Conjoint Analysis Types
Choice-Based Conjoint (CBC) Analysis
- Most common form of conjoint analysis.
- Used to identify how a respondent values combinations of features.
- Respondent chooses their most preferred option from a set of >=2 product profiles.
- Stimulates real-world purchase decisions where customers have to choose between available options.
- Advantage: straightforward and easy for respondents to understand.
- Disadvantage: can be overwhelming if too many product profiles are presented.
Adaptive Conjoint Analysis (ACA)
- A more dynamic approach.
- The survey adapts to each respondent's choices, showing them new product profiles based on their previous selections.
- Customizes each person's survey experience based on their answers to early questions.
- Aims to reduce the number of questions needed while maintaining accuracy.
- Advantage: more efficient in terms of the number of questions required.
- Disadvantage: more complex to design and analyze compared to CBC.
Max-Diff Conjoint Analysis
- Multiple options are presented to the respondent.
- Organizes on a scale of most preferred to least preferred.
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Description
This quiz covers the relationship between manufacturing costs and design, and how conjoint analysis helps identify customer needs and product features.
