Today again, I have been given a chance by my group coordinator to write whatever I want on Conjoint Analysis. Oooh, so whatt is Conjoint Analysis...??? If you have been following the blog, the definition, meaning, advantages, disadvantages, application, etc, everything has been explained thus far.
But do you still, understand how this magic wand functions? Well I have not completely understood how it functions, but today yet again our very own Prof. Bhate in his 20th lecture, mesmerised me with the way in which this quant tool simulates the choice of an individual.
Now when I came back from the lecture, I tried to read it from several other blogs and websites as to how actually this technique works. The First step involved in it is to describe products in attributes and levels. An attribute is a general feature of a product or service. Each attribute is valued down into specific levels. For example, we might describe an object in attributes like - durability, looks and price. A specific level for the same can be defined as anything like say 8 years, Good Looking and say Rs. 50/-
Conjoint analysis takes these attribute and level descriptions of product/services and uses them in interviews by asking people to make a number of choices between different products. So this we had done in class the day before and had collected the information/data in an excel sheet. By asking for enough choices (and with good design to minimise the number of choices), we worked out numerically how valuable each of the levels is relative to the others around it – this value is known as the utility of the level. Then came the time to know the outcome. However, we can also compare across attributes to see which attributes make have the greatest impact in making a choice. We can therefore say which the most important attribute is and measure importance by taking the relative impact of one attribute compared to the others.
In Toto we learnt from the entire exercise that conjoint analysis is a sophisticated technique and there are technical issues that needed to be considered. In particular, the design of attributes is a crucial step in a conjoint project as choices between poorly defined levels can render the exercise meaningless.
FINANCE - GROUP 1