Introduction to Conjoint Analysis

Conjoint analysis is a market research tool for developing effective product design.
Using conjoint analysis, the researcher can answer questions such as: What product
attributes are important or unimportant to the consumer? What levels of product
attributes are the most or least desirable in the consumer’s mind? What is the market
share of preference for leading competitors’ products versus our existing or proposed
product?
The virtue of conjoint analysis is that it asks the respondent to make choices in the
same fashion as the consumer presumably does—by trading off features, one against
another.

For example, suppose that you want to book an airline flight. You have the choice of
sitting in a cramped seat or a spacious seat. If this were the only consideration, your
choice would be clear. You would probably prefer a spacious seat. Or suppose you
have a choice of ticket prices: $225 or $800. On price alone, taking nothing else into
consideration, the lower price would be preferable. Finally, suppose you can take
either a direct flight, which takes two hours, or a flight with one layover, which takes
five hours. Most people would choose the direct flight.

The drawback to the above approach is that choice alternatives are presented on
single attributes alone, one at a time. Conjoint analysis presents choice alternatives
between products defined by sets of attributes. This is illustrated by the following
choice: would you prefer a flight that is cramped, costs $225, and has one layover, or a
flight that is spacious, costs $800, and is direct? If comfort, price, and duration are the
relevant attributes, there are potentially eight products:

Product	Comfort	Price	Duration
1	cramped	$225	2 hours
2	cramped	$225	5 hours
3	cramped	$800	2 hours
4	cramped	$800	5 hours
5	spacious	$225	2 hours
6	spacious	$225	5 hours
7	spacious	$800	2 hours
8	spacious	$800	5 hours

Given the above alternatives, product 4 is probably the least preferred, while product 5

is probably the most preferred. The preferences of respondents for the other product

offerings are implicitly determined by what is important to the respondent.

Using conjoint analysis, you can determine both the relative importance of each

attribute as well as which levels of each attribute are most preferred. If the most

preferable product is not feasible for some reason, such as cost, you would know the

next most preferred alternative. If you have other information on the respondents, such

as background demographics, you might be able to identify market segments for which

distinct products can be packaged. For example, the business traveler and the student

traveler might have different preferences that could be met by distinct product offerings.