Several businesses use conjoint analysis to appraise their products or services as well as determine how customers recognize them. Products are separated into distinguishable features or characteristics and included in the survey for ratings.
When to run the conjoint analysis?
Running conjoint analysis is labor-intensive but the pros outweigh the costs if performed correctly. In some products consumers make a purchase decision based on emotions, so conjoint analysis will not offer actionable insights. However, if the product offers concrete features that can possibly be compared with your rivals then run a conjoint analysis. The technique offers businesses an insight into how customers make purchase decisions and the reasons behind their choices. It even offers researchers awareness about –
- What to add to their product?
- What impact will the changes have on their sales?
- Will the intended changes offer a competitive edge?
- How will the price change impact sales?
The insights got from conjoint analysis helps decision-makers address the following business areas –
- Product development
- Product improvement
- Competitive positioning
How does conjoint analysis work?
Now you know about the compelling reasons why you should consider a conjoint analysis study, let’s get to know its working mechanism.
Conjoint analysis is categorized into 3 phases
- Data – Data collection associated with different attributes. In the preliminary survey, researchers can identify how products break down in customer’s minds. Information obtained from the preliminary survey represents the questionnaire after thorough exploration and consideration.
- Analysis – The moment survey answers start coming from respondents, statistical data analysis is conducted. It is a process that helps to derive insight from the results. The information is represented in the form of charts or graphs for better interpretation and understanding. It allows the managers to recognize and figure out the meaning of the result.
- Action – After understanding the results, the managers use them in a conjoint analysis. It helps businesses fuel demand for their brand. For example, a decision is made to add new features or change price, or adjust marketing strategy.
Conjoint analysis benefits
It offers simple methods for experimentation with different factors like attributes, price, etc. For the new product launch, this technique helps to create a product profile that can be modified to produce extra profiles for different attributes. Ultimately, it helps organizations find a balance between views of every choice and use each attribute evenly across the survey.
The technique even allows a huge homogenous market divided into small groups based on age group, demographics, and preferences. Market segmentation empowers an organization to target every homogenous group efficiently because the preferences and needs are well-recognized. Thus, decisions can be taken, accordingly.
Information about the strength of a brand name with competing brands can be measured with ease. Thus, brands can make a decision based on brand value. If the brand is popular then its value can get affected by the changes in features and price.
Conjoint analysis is effective during the product remodeling process. It allows the manufacturer to gain an idea of which features or characteristics to add based on respondents’ survey responses. It even helps to identify the impact it can have on costs and overall profitability.