Tuesday, 6 September 2011

Marketing, and a dash of operations with a little help from a friend called Conjoint Analysis

Today, I start to speak about Conjoint Analysis. Conjoint Analysis was the latest topic to be taught by Prof. Bhate, and there are a variety of interesting applications, which obviously make business sense. This helps offer viability packages to earlier issues which plague industries, which is viable and obviously hedges against the risk and the losses companies and people face while doing business.

Let us have a look at one interesting paper I came across.Fruits & Vegetables suppliers and farm cooperatives preferred large corporate retailers compared to medium and small retailers. Small retailers don’t usually have cold storage facilities, which leads to It’s a lost opportunity and low sales for the small and medium retailer. It also leads to lower supplier margin as the corporate pay less per unit of produce than the medium retailer. To overcome this issue, a uniform ‘Perishable Delivery Package’ was sought to be developed. To address the issue, Conjoint analysis was used to derive the utility value of the various aspects of Perishable Delivery Package. The research objective aimed at formulating an orthogonal design for the perishable delivery package, and to derive utility scores of individual factors in the design and to derive the highest rated perishable delivery package. A proper conjoint analysis was done and the factors were assembled, which were – Type, Price, Return and Credit. These were the critical factors. After due analysis, it was found that each had an attached Importance Score to it, in which the Type Variable made the max scores. This helped in bringing in uniform delivery unit and also a massive clarity in order placement and supply as far as medium vegetables and fruit retailers are concerned. Also this way, they managed to find out an innovative way for medium retail stores to compete with big firms in perishable produce sector without necessarily investing in cold storage facilities. Helped bring in a totally new way of looking at things, and this would ultimately benefit the small and medium size retailers.

Many sites offer to help us with Conjoint Analysis. One such site is www.dobney.com, where they provide you with a live demo on how Conjoint Analysis helps companies make their products & services, and obviously fine tune it to suit it more for customer needs, against cost and pricing considerations to optimise the value they can deliver for the customer against the costs involved – for example, how much more should you charge for a larger pizza for instance and do different types of base have different values to customers and so indicate different willingness to pay. If it helps businesses grow to their optimum potential, it is obviously of great measure and help. An example pointed out in one of our marketing classes relate to the fact that customer’s preferences will drive home product specifications, and their allied marketing activities.

Sagnik Biswas
Marketing 2

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