Monday 5 September 2011

Conjoint Analysis

It is essentially a technique used to determine the tradeoffs people make in choosing between products or anything for that matter (not just a product). Speaking about products and attributes makes it look like a marketing tool. However this analysis is more than just a “marketing research technique.”

Conjoint analysis is typically used to identify the most desirable combination of features to be offered in a new product or services (e.g. what features should be offered in a new public telephone booth?). In such studies, respondents are told about the various combinations of features under consideration and are asked to indicate the combination they most prefer, to indicate the combination that is their third preference, and so on. Conjoint analysis uses such preference data to identify the most desirable combination of features to be included in the new product or service.

It applies a complex form for analysis of variance to the data obtained. This analysis then calculates a value for each feature. Features which have the highest values are taken to be most important to respondents.

This is applied to categorical variables, reflecting different features or attributes of the product under consideration. Since it is applied only to these kind o variables it is different from cluster or factor analysis.

Conjoint analysis is like cluster and factor analysis in the sense that these methods try to identify the interdependencies which exist between a numbers of variables. In the example involving a new public telephone booth, the variables are the features that can be designed into the new system and also tries to measure the relative importance of various combinations.

Harshala D

No 13174(Finance, group 5)

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