Conjoint analysis is rooted in the real world, where customers rarely focus on a single variable, but consider a range of product factors before making a decision. It is sometimes known as ”trade-off” analysis, because consumers are put in situations where they have to make compromises.
Conjoint analysis methods are all based on the same principle: breaking down a product into its key attributes in order to analyze how consumers make decisions. Its strength lies in the fact that the relative importance of variables is not drawn from direct questions and consumer statements, which tend to be unreliable. Instead it is deduced from calculations, based on observing the trade-offs consumers make when confronted with various choices.
Conjoint analysis for decision-making
Several varieties of conjoint analysis exist. At Strategic Research, we prefer to use Choice-Based Conjoint, a rigorous methodology that enables complete products to be tested through choice exercises that are similar to a real-life purchasing decision. Used most frequently to set price, it provides a solid base for decision-making across all aspects of marketing:
- Product innovation: highlight the optimal combination of product features and the premium consumers are prepared to pay for each additional feature
- Pricing: identify the optimum price to maximize demand and/or brand revenue; determine price elasticity; optimize pricing for a product line, to maximize overall demand and avoid product cannibalization; determine price strategies to follow in response to competitor moves
- Advertising: Select the best advertising messages and concepts for specific target audiences.