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Conjoint analysis makes the seemingly complicated simple. How do we go about scientific market research…?


How it Works

How do we do it?

We firstly define your product attributes (e.g. price, colour, performance, etc.) and then define the range of levels within each attribute (e.g. for Price: £50, £75, £100, £125). We then calculate the number of options combining all the different levels in each attribute. Using specialist software, we will create a fractional sample of all these permutations to design a questionnaire to provide the information to model consumer choice. We then interview between 200 and 400 people who are asked to sort the options into ‘good’ and ‘bad’ piles and then rank each pile by preference.

What do you get at the end?

Data entered into conjoint compliant software ranks the importance of each attribute and the preference for each level within each attribute. This information can then be used to position your product or service in its correct position in the marketplace.

Sound complicated? It’s really very simple. Have a look at a market research project we undertook for home media providers SouthWestern Bell.

Step One – The Problem:


 

Having launched cable telephone to augment cable television, SouthWestern Bell was keen to ascertain how to best position this joint product offering to maximise dual sales of their product range

There was a need to gain an appreciation of consumer choice with regard to what features of the join proposition would appeal most to consumers.

What it means…

 

They needed to answer the question – what proposition will encourage a consumer to buy both products in one transaction.

SouthWestern Bell had a problem with customers cancelling their subscriptions as there was no minimum contract. They need to ascertain what their customers actually wanted in order for them to stay loyal.

Step Two – The design:


 

Initially, there was a need to define the key attributes of the joint cable telephone and television proposition, namely product, installation charge, contract length and price per month.

Secondly, a list of levels within each attribute, which the company could realistically offer, were then defined which compromised of different combinations of television packages, premium channels (e.g. sports and movies) and telephone line rental and features.

How we did it…

The various options created 144 permutations of choice which is too many for customers to choose from. A random selection of 14 of these choices is enough to model consumer choice. In a market research environment, a representative sample of consumers need to rank these 14 propositions, which are all printed on to cards, from the most preferred to the least preferred proposition. We would recommend 400 consumers within your company’s catchment area to be engaged (preferably face-to-face).

See the Full Design Breakdown Here

Step Three – Analysing the data:


 

After the market research fieldwork has been completed, the data analyst now has 400 rankings of the 14 propositions from the most preferred to the least preferred. The computer software then analyses the interaction of choice and evaluates which levels within each attribute have had the greatest impact on consumer choice.

Each level is designated a ‘utility’ score (satisfaction received from evaluating the level within the propositions) – the higher the utility score the greater the importance that level has within this evaluation of consumer choice.

Defining the choices…

The model then shows us:

  • The level of importance (as derived from the utility source) within each attribute.
  • Utility scores for all 14 levels to enable calculation of which combination of levels derive the highest level of appeal.

Step Four – Implementation


 

The highest level of utility was derived from the combination of:

  • Basic television package plus one premium television package plus telephone line rental
  • £10 installation charge
  • One year minimum contract length
  • £29.99 per month

Customer and company benefits…

Customers could obtain both products available on one bill from one supplier through one telephone connection point. They were less likely to disconnect with a one year contract and received significant monthly discounts by joint subscription rather than sourcing each product separately.

The company benefited from increased sales levels, a significant reduction in disconnection levels/churn and economies of scale for installation, billing, customer service.

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